Sent: Wednesday, October 14, 2009 3:15 PM
To: All PN, BSCN and PHILLY.COM Employees
Subject: Bankruptcy Update/Schedule
As many of you may have now seen based on the reporting in The Inquirer and Daily News, the company filed papers yesterday in federal district court to appeal last week’s ruling on credit bid rights. We continue to believe it is in the best interests of the company to have an auction process in which all potential bidders are treated equally and that giving the lenders the right to credit bid will hinder the willingness of other bidders to get involved in the process.
The appeal focuses on the underlying legal reasoning of the bankruptcy court’s ruling, which we believe to be inconsistent with both the manner in which the company’s current plan of reorganization is structured and existing legal precedent on this issue. While a hearing schedule has yet to be set by the district court, we believe that this appeal will be heard before the company’s current bid deadline of November 16.
Separately, an updated schedule has been set by the bankruptcy court for the auction process. Under the current schedule, the company’s disclosure statement hearing will be on October 28, the deadline for all interested parties to submit bids is November 16, the auction will take place on November 18 and the plan confirmation hearing will occur on December 4.
Updates will follow as more information is available.
Michael J. Lorenca
Sr. Vice President Human Resources
Philadelphia Newspapers LLC
Bankruptcy Judge’s Ruling Makes Tierney Ownership Of Inky/DN Unlikely
NEW YORK TIMES: A bankruptcy judge’s ruling has dealt a serious setback to the bid by Brian P. Tierney and his allies to keep control of The Philadelphia Inquirer and The Daily News, increasing the odds that a group of private equity funds and banks will become the papers’ new owners. The papers are likely to be put up for auction to resolve the bankruptcy, and in such an auction, the law generally allows senior creditors to bid the amount they are owed, without putting up cash. In this case, that means the banks and equity funds could make a “credit bid” of about $300 million. That is far more than the $66 million in cash and real estate bid by a group of local investors assembled by Mr. Tierney, the paper’s chief executive. No other bidder has emerged so far. MORE