A federal appeals court has ruled that Philadelphia Newspapers L.L.C., the parent company of The Inquirer, the Daily News and Philly.com, can bar its senior lenders from using their debt to try to purchase the company at auction.

In a 2-1 opinion issued this morning, a panel of judges from the Third Circuit Court of Appeals agreed with a lower-court ruling that the bankruptcy code requires only that the lenders receive the "indubitable equivalence" - or fair value - of their debt when the company is sold at auction.

The auction is central to the company's reorganization plan, which now calls for senior lenders to be paid about $67 million to settle about $318 million in debt. The auction would establish whether that, indeed, was a fair price for the company.

With the ruling, the company is now set to be put up for auction April 27.