After a long search for someone to buy States News Service, Leland Schwartz, owner and founder of the struggling Washington news bureau, has filed for reorganization in bankruptcy.
A group of new investors has agreed to take over the service if a bankruptcy reorganization can eliminate most of its debts, Schwartz said in documents filed in federal bankruptcy court last week.
The petition for reorganization under Chapter XI of the bankruptcy law was filed by Schwartz personally and on behalf of the firm.
States News Service has about $700,000 in debts and has received an offer of $10,000 for its assets, the bankruptcy petition says. Major creditors include the Internal Revenue Service, the District government, and the telephone company.
With 25 employes, States News Service provides specialized news coverage of the federal government to 70 newspapers, most of them too small to afford their own Washington bureau. The bankruptcy filing projects that the service will collect $28,000 in fees from members this month, but will spend more than $50,000 on payroll and other monthly operating expenses.
Schwartz asked the court for quick approval of a plan to sell the news service, effective Feb. 23. Potential buyers have offered to pay $10,000 for the business and to give Schwartz a management contract to operate it.
Court documents identify the would-be buyers as SNS Ventures, a joint venture of two Delaware corporations, News Information Inc. and SNS Holdings Inc. They are reported to be front companies for Pulitzer Publishing Co. of St. Louis and Indian Head Corp., a New York conglomerate.