Two large creditor groups alleged in U.S. Bankruptcy Court filings yesterday that the owners of the
have not been negotiating seriously with the creditors to whom they owe about $400 million.
Both creditor groups filed objections to the newspapers' request for 90-day extensions of "exclusivity periods," during which the current owners, led by chief executive officer Brian Tierney, would be able to propose and solicit support for a reorganization plan.
Without extensions, the creditors would be allowed to propose restructuring plans of their own - one of which was presented to Tierney nearly three months ago, according to a court filing by the newspapers' biggest lenders.
Since the newspapers filed their Chapter 11 bankruptcy petition in February, the secured lenders alleged, Tierney and his executives "have determined not to engage in any meaningful negotiations on a restructuring with their prepetition creditors. . . . "
Instead, the lenders contended, Tierney has been working on an "Insider Plan" to keep the newspapers under the control of local investors who put up $150 million to buy the Inquirer and Daily News in 2006.
"The details of the Insider Plan remain a mystery to the Prepetition Lenders, other than that it involves an infusion of new money from the Debtors' prepetition equity insiders . . . ," according to the secured lenders' filing.
Similar objections were voiced by unsecured creditors.
"The Debtors have not made good faith progress toward reorganization," its lawyers said. "By filing bankruptcy petititions, the Debtors immediately received a 120-day 'breathing space' within which to formulate a plan of reorganization. But to date, the debtors have failed to utilize this time period productively."
The group cited "stalled negotiations with the senior lenders."