Lawyers for Philadelphia Newspapers L.L.C. and its creditors said yesterday that they were unable to resolve a contentious dispute over interim financing for the bankrupt media company, and a judge allowed them to continue mediation attempts.

Lawrence G. McMichael, a lawyer for the company that owns The Inquirer, the Philadelphia Daily News, and, said the parties spent six hours Thursday in a "fulsome" discussion before a mediator but were unable to resolve the dispute over short-term financing, known as debtor-in-possession financing.

Chief U.S. Bankruptcy Judge Stephen Raslavich allowed the company and its senior lenders to resume mediation attempts Monday. He ordered them to report back to him Tuesday.

The company has requested permission to borrow $15 million to sustain Philadelphia Newspapers during the coming months. Under bankruptcy rules, that loan would be the first to be paid off upon reorganization.

The company's lenders objected, and offered to finance a similar loan, but on terms that would require lenders' prior approval of any reorganization plan. The company is opposed to that provision.

The side issue to the overall bankruptcy case is being mediated by Bankruptcy Judge Richard E. Fehling, who is based in Reading.

The company, which sought bankruptcy protection in February, on Thursday presented a $92 million plan that would use cash and property to clear about $300 million in secured debt.

It told the court it hoped to emerge from bankruptcy in November.

Contact staff writer Andrew Maykuth

at 215-854-2947 or