NORFOLK -- The financially troubled Journal and Guide, the nation's third oldest black-oriented newspaper, was released from Chapter 11 bankruptcy last week, leaving it free to operate without court restrictions.

However, the future of the Journal, which sought bankruptcy protection from its creditors in January 1985, still remains uncertain because it owes the Internal Revenue Service a back tax debt of about $92,000.

U.S. Bankruptcy Judge Hal Bonney Jr. dismissed the newspaper's bankruptcy status at the request of the government. Bonney's decision, which strips the newspaper of protection from its creditors, means the IRS can collect the tax money through whatever means it chooses, without having to operate through Bonney's court.

It was unclear last week how the IRS would collect the tax debt. An IRS official at the hearing declined to comment.

"We are out of bankruptcy," said a relieved Brenda Andrews, publisher of the newspaper. "We are just like every other business now."

Paying the tax debt is "something we'll have to work out with them {the IRS}," she added.

In December 1985, Bonney approved a seven-year bankruptcy-reorganization plan to help the financially ailing newspaper pay its creditors.

Since reorganization, the newspaper has met its current tax obligations, but has been unable to satisfy the back tax debt.

The government sought the dismissal last Tuesday rather than a conversion to a Chapter 7 liquidation bankruptcy because the IRS stands to recoup more of its money that way than through a conversion, federal officials said.

"The primary consideration {in seeking a dismissal} was the fact that we would avoid the administrative expenses that would be involved in a conversion, that is the hiring of a trustee, etc. to liquidate the assets," said Phil Krajewski, an assistant U.S. Attorney.

Bonney asked Andrews why the newspaper was still struggling despite two years of Chapter 11 protection and his earlier advice to increase subscriptions.

Andrews explained that little advertising is the overall reason for the newspaper's financial woes and lack of growth.

"When advertising is low, it prevents us from printing a large paper," she said. "Many people compare the size of the paper with the daily paper."

"What we're dealing with is reversing 30 years in a three-year period," Andrews said.

The Guide currently has a circulation of about 27,000, about the same as in 1985, she said.endqua