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Friday, August 21, 2009

Creative Loafing Inc. and its largest creditor will duke it out next week

Only two bidders will compete in next week's equity auction that will determine who controls Creative Loafing Inc.'s six newspapers: a team headed by current Creative Loafing CEO Ben Eason, and the New York hedge fund to whom Eason owes $30 million, Atalaya Capital Management.

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According to a document filed today in federal bankruptcy court in Tampa, where Eason filed for Chapter 11 bankruptcy protection last year:

Creative Loafing, Inc. and affiliated debtors ... hereby file for in camera review ...  the documents comprising the respective bid packages received from Atalaya ... and Creative Loafing Management, LLC (“CLM”), which are the only bidders identified as Qualified Bidders pursuant to the Bidding Procedures Order.

The deadline for bidders to join the Aug. 25 auction was 4 p.m. yesterday.

Details of the bids have not been filed in bankruptcy court, though past documents state that Atalaya will present the opening bid of $2.2 million. If Eason prevails, he will have to pay Atalaya at least another $12 million in the form of a promissory note.

(Photo by Joeff Davis)

UPDATE: Our colleague Wayne Garcia, at Creative Loafing Tampa, attended a hearing related to the case this afternoon and has this to report:

The bids were not discussed in detail. "It looks to me as if the offers are pretty straightforward," federal bankruptcy Judge Caryl E. Delano said.

Other developments: Eason and company were denied an attempt to get "expedited discovery" (access to witness lists and other material) related to Atalaya's bid, but Judge Delano said there will be plenty of time next Tuesday to offer evidence or testimony if there is a dispute over the bids.

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