Monday, November 23, 2009

Debt that caused SoVo/David collapse revealed: $15M

Posted By on Mon, Nov 23, 2009 at 10:23 PM

photobymatthennie

Details continue to emerge one week after the shutdown of Atlanta's leading LGBT publications Southern Voice and David, including the amount of debt, who was owed and whether they will ever get paid back.

Former SoVo/David owners Window Media and Unite Media filed separate petitions Friday in U.S. Bankruptcy Court of the Northern District of Georgia.  Project Q Atlanta reviews the reports.

Here's a breakdown of that $15 million debt figure:

The 94-page filing from Window and the 48-page filing from Unite offer details of two companies that faced severe financial struggles. Window lists claims of nearly $7.85 million to 277 secured and unsecured creditors, while Unite’s claims include $7.5 million to 126 creditors. Combined, the companies owe $1.04 million in payroll and other taxes to federal, state and local agencies; $418,189 to printers in several states; $168,109 in rent in Atlanta, Fort Lauderdale and Washington, D.C.; $71,798 to distributors of the former publications; and $4,500 to two companies providing health insurance.

And for anyone who has tried to collect from a company only to find that they have filed for Chapter 7, you know how this story ends when it comes to getting that money back:

Both companies filed for Chapter 7 bankruptcy, which means liquidating any assets with proceeds going to creditors after administrative expenses are paid. But vendors and former employees, some of whom weren’t paid for four weeks when the companies closed, likely won’t see proceeds from the bankruptcy. The companies say in the filings that they estimate there will be no funds to pay unsecured creditors after bankruptcy.

The cases receive their first hearing before Chief Judge Mary Grace Diehl in Atlanta on Dec. 7.

So first dibs on any money from Window Media and Unite Media go to the secured creditors, Avalon Equity Funding and M&T Bank, who are owed roughly $12.5 million combined.  That leaves out in the cold the people whose plight is causing such an outpouring of support in the LGBT community and beyond.

The company struggled with paying freelancers and those financial difficulties later impacted its fulltime employees. Earlier this year, paychecks were often delayed a week or more and payments were staggered among employees. Former employees said Wednesday they did not receive their last paycheck, which was due two days earlier. They expect to lose up to four weeks of pay. Scores of freelancers are also owed thousands of dollars, according to the bankruptcy filings. Three freelance photographers in two state are owed more than $12,000.

As reported Friday by CL, former SoVo editor Laura Douglas-Brown has a website up and is in the planning stages of starting a new "community-owned, community-led" LGBT news outlet.  Details about that and other LGBT publications in town trying to capture SoVo and David's wandering audience are coming up in Fresh Loaf shortly.

UPDATE: It should be noted that Window Media and Unite Media not only owned Southern Voice and David but several other publications across the country as well, including the Washington BladeSouth Florida Blade and 411 Magazine.  Therefore the figures quoted in regards to the debt that caused the shutdowns involved ALL of Window Media and Unite Media's holdings.

(Photo courtesy Matt Hennie)

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