The owners of The Inquirer, The Philadelphia Daily News, and Philly.com yesterday were given an additional 60 days to complete a restructuring plan to bring the company out of bankruptcy.
A draft restructuring plan by Philadelphia Newspapers L.L.C. reiterates it seeks to raise $50 million in new investments, according to testimony in U.S. Bankruptcy Court. The owners have written commitments from investors for "about $10 million" and verbal commitments for the rest, according to Richard Thayer, the company's executive vice president for finance.
Lawrence G. McMichael, a lawyer for the newspapers, said 60 days should be more than enough time to complete the reorganization plan, which is now due Aug. 31.
McMichael had sought a 90-day extension. That was opposed by a number of creditors, who argued they had been left in the dark by the company about the reorganization plan. This includes how it intends to deal with issues such as forthcoming contract negotiations with its 14 unions.
Thayer said the company would begin negotiations once it had completed its reorganization plan. Union contracts expire Aug. 31.
Gary Schildhorn, a lawyer who represents the unsecured, or second-tier, creditors, asked that the company be given only a 30-day extension.
Abid Qureshi, a lawyer for a group of senior lenders who control $140 million of the company's debt, asked that no extension be given.
"It does appear that they, to some extent, have been frozen out of the case," U.S. Bankruptcy Judge Jean K. FitzSimon said of the creditors after hearing testimony. "But I do think the debtors have shown some significant progress in developing a plan."
Thayer said the company has been pursuing new investments in the papers, which owe senior lenders, including Angelo Gordon & Co. and CIT Group Inc., about $300 million in debt.
Without giving details, Thayer said the papers had commitments from "individuals and institutions" for $50 million in new investments - about half pledged by original investors and the rest coming from new investors. He declined to identify any potential investor.
He said the company had hoped to have its restructuring plan ready this Friday, but too many issues remained.
Speaking to reporters after the hearing, McMichael said such a delay was not surprising given the nature of what he called "a very big and complicated case." As for creditors being "frozen out," McMichael said the company was being cooperative, but "you cannot negotiate new capital by committee."