paidContent.org - Alt Weekly Firm CityPaper Files For Ch 11 Bankruptcy

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Rafat Ali

paidContent.org
Monday, September 29, 2008; 1:07 PM

Creative Loafing, the alt weekly news firm, has filed for Chapter 11 bankruptcy, the first in the long line of smaller newspaper companies that may likley do so over the next year or so. About a year ago the company announced an undisclosed amount of mezzanine funding from BIA Digital Partners, the media PE firm, when it also bought two of the industry's most venerated titles, the Chicago Reader and Washington City Paper. It has papers in Tampa Bay area, Charlotte, N.C., Birmingham, Ala., Atlanta, Chicago and Washington D.C.

According to Washington CityPape r, one its publications, in a conference call with top company officials, Ben Eason, the company's CEO, said that the step would allow the papers to establish a greater online presence while the company reorganizes its operations, which likely means some of the print editions may close soon. The company describes it as a financial engineering move: "The term 'bankruptcy' conjures up all kinds of images and demons but it is essentially a legal proceeding designed to give an over-leveraged company the time, process and a safe harbor for which to reorganize its finances. Chapter 11 was the natural place for the Company to go to accomplish an orderly reorganization of our finances." Likely means the BIA funding went south, somewhere along the line, as of course did the company's fortunes. The company also denies any connection between the acquisitions last year and Ch 11, and says there won't be any major layoffs...lotsa spin in there, if you ask me.

Alt Weekly Company Creative Loafing Gets Funding; Buys Chicago Reader and Washington City Paper