Philadelphia Newspapers L.L.C.'s "Keep It Local!" campaign "undercuts the integrity of the bankruptcy process" by unfairly benefiting current management while "demonizing" potential out-of-town bidders, according to a creditors' motion filed in U.S. Bankruptcy Court yesterday.

In its motion, the committee for unsecured creditors asked that the court order the company to stop the campaign. The motion also asked the court to "grant other remedial action . . . to rectify the damage done to date."

The unsecured creditors are the second-tier holders of debt and must wait behind senior creditors for repayment.

Jay Devine, a spokesman for Philadelphia Newspapers, said the motion was an attempt to "keep people in the dark about our plan" to reorganize the company. He said the campaign had been well-received by readers, advertisers, and others in the community. The company will "not be intimidated," he said, and it intends to continue the campaign.

The company, which owns The Inquirer, the Philadelphia Daily News, and Philly.com, launched the campaign after the release of its reorganization plan Aug. 20. The plan calls for the company to use $66.6 million in cash and property to settle about $300 million in secured debt. It also calls for the company to be put up for bid to see if there are buyers willing to provide a better price for the lenders.

The company's senior lenders, which include a number of New York hedge funds and investment banks such as Angelo, Gordon & Co. and CIT Group Inc., have said they want to bid on the company and would replace management if they won.

The company's publicity campaign has included full-page ads in The Inquirer and the Daily News extolling the virtues of "local ownership" while warning that the company "can expect significant reductions . . . in employment, investment, and in subcontracting" should "out-of-town corporate owners take over."

Some ads have suggested that an out-of-town owner might close one of the papers.

"This entire campaign is designed to dissuade otherwise interested bidders, who will think twice before participating in an auction where . . . the community, employees, and advertisers will have been led to believe . . . that any new owners . . . are vile and will destroy the papers," the motion said. "This is bid-chilling, plain and simple. It should not be tolerated."

The creditors have requested a hearing for Wednesday.

Contact staff writer Christopher K. Hepp at 215-854-2208 or chepp@phillynews.com.