It is put-up time for anyone who would like to be the next owner of The Inquirer.

The venerable newspaper, along with the Philadelphia Daily News and the Web site Philly.com, will be up for auction Tuesday in New York. Opening bids are due Friday.

Just to get in the door, you need a $3 million "good-faith deposit" and be able to prove you can raise at least $25 million more in financing.

The auction is central to the reorganization plan of Philadelphia Newspapers L.L.C., the parent company of The Inquirer, which declared bankruptcy Feb. 22, 2009.

Under the plan, the company is to be auctioned to the "highest and best bidder," with the proceeds going to settle about $318 million in debt.

At the moment, the only bid for the paper has been withdrawn. A revised version is expected to be resubmitted by Friday's 5 p.m. deadline. The bid had been made by an entity known as Philly Papers L.L.C., which consists of Bruce Toll, vice chairman of Toll Bros. Inc.; the Carpenters Union pension fund; and the philanthropist David Haas. Toll and the pension fund are previous investors in Philadelphia Newspapers.

When the new bid is offered, it will include at least one new investor: William A. Graham, chief executive officer of Graham Co., a Philadelphia-based regional insurance broker, and a major investor in the company before the bankruptcy.

Philly Papers' opening bid was $35 million in cash and $17 million for everything but the company's North Broad Street headquarters.

Graham said Thursday that he expected Philly Papers to make a similar bid Friday.

The way in which the auction will proceed is laid out in a court order detailing "bid procedures."

Under the agreed-upon rules, potential bidders must submit their initial offer in writing to the company's financial adviser, Sonenshine Partners in New York, by the 5 p.m. Friday deadline.

Over the weekend, company officials, together with their financial advisers and lawyers, will review offers to determine which at that point represents the "highest and best" bid.

"Highest and best" is a term meant to take into account various factors beyond strictly cash. For instance, the Philly Papers' bid had been contingent on reaching contract agreements with the company's unions. An identical monetary bid without that contingency could be determined "the best bid" of the two.

Watching over the process will be two sales monitors, retired federal Judge Arlin M. Adams and J. Scott Victor, an investment banker who specializes in distressed-debt situations. The sales monitors were appointed by U.S. Bankruptcy Judge Stephen Raslavich to assure the fairness of the auction.

By Monday, an opening bid will have been selected as the "highest and best." All bidders will be notified of the terms of that offer so they can decide how to bid on Tuesday, the actual day of the auction.

How many bidders there will be is an open question. Lawrence G. McMichael, attorney for the company, estimated there could be from three to five, which would include Philly Papers and the company's senior lenders, who have repeatedly said they intend to bid. The senior lenders represent creditors who hold the largest share of the company's debt. They include Angelo, Gordon & Co., the CIT Syndicated Loan Group, Credit Suisse, and Eaton Vance Management Inc.

The auction itself is set for 11 a.m. Tuesday at the New York offices of Proskauer Rose, a law firm that represents the company.

It will be held in a large conference room, open only to the participants.

The auctioneers will be McMichael and Mark Thomas of Proskauer Rose. They will run the bidding process, which will be more deliberate and visually sedate than the popular image of an auction.

"This is not like a flea market auction with some guy up there calling out 'Going once, going twice,' " McMichael said.

Rather, there will be a round robin, with each bidder given an opportunity to top the existing high bid. The minimum monetary bid increase will be $100,000.

After each round of bids, there will be a break of 15 to 20 minutes to allow the participants to reconsider their positions and prepare for the next round, McMichael said.

"People are going to want to caucus and look at their situations and decide what their next move is," he said.

The auction goes until the last bid goes unchallenged.

"The last auction I was part of started at 10 a.m. and did not conclude until 9:30 that evening," McMichael said.

Once the auction is completed, McMichael said, the company, in consultation with the monitors, will announce the winner.

Even then, matters are not settled.

Anyone who objects to the outcome may raise issues on May 25, when the company's plan faces a confirmation hearing before Raslavich in Bankruptcy Court in Philadelphia.

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