Philadelphia Newspapers L.L.C. and its creditors have reached a final accord on short-term financing for the company and are making progress on other issues regarding its reorganization plan, an attorney for the media firm told Chief U.S. Bankruptcy Judge Stephen Raslavich today.
A number of key issues that were to be argued today were put on hold until Monday while the company and its creditors try to resolve them through mediation.
Among them were the procedures for putting the firm up for auction and whether the company can continue its publicity campaign, which argues the community benefits from local ownership of The Inquirer, the Daily News and Philly.com, as opposed to ownership by out-of-town creditors.
Anne Marie Aaronson, attorney for the company, told Raslavich that mediation between the parties thus far had resulted in "progress in various areas," including the bid procedures and the overall reorganization plan.
Both sides have settled the final details of a $15 million short-term loan, known as debtor-in-possession financing, that will be used to cover cash shortfalls while the company is in bankruptcy. The loan will be provided by Citizens Bank, one of the company's senior lenders.
The company's proposed reorganization plan would pay senior lenders $66.6 million in cash and property to settle about $300 million in secured debt.
The plan also calls for the company, which filed for Chapter 11 reorganization in February, to be put up for auction to determine whether there are potential buyers who would provide lenders a better deal.
Contact Christopher K. Hepp at 215-854-2208 or chepp@phillynews.com.
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