A bankruptcy judge in the District yesterday began considering a proposal to sell United Press International to a Mexican newspaper publisher, amidst last-minute efforts to torpedo the $41 million deal.
In the first of what could be several days of hearings, lawyers for UPI urged Judge George F. Bason to approve the purchase agreement reached with Mario Vazquez Rana and his junior partner, Houston financier Joe E. Russo.
The hearings appear to be the last chance for the Financial News Network, leader of a rival consortium of investors, to derail the sale, which previously was endorsed by UPI management, the union for the news agency's workers, and a committee of the wire service's creditors.
They also come a day after FNN officials and representatives of Vazquez met to consider some kind of joint venture. Sources said nothing came of those talks.
One of the main issues to be decided by Bason is whether the bidding process was unfair and, as a result, needs to be reopened to FNN and even other prospective buyers. FNN has argued that its offer not only is better than the Vazquez-Russo deal, but that it was unfairly denied a 48-hour extension which it says it had been promised at the end of the bidding process last month.
FNN's campaign to reverse the deal received a boost this week when the creditors committee asked the judge to postpone approval. The creditors, who have high priority in the bankruptcy proceedings, raised questions about the bid process and noted that they had received a new offer from FNN that would pay major creditors more than the Vazquez-Russo proposal.