Auction for papers' fate pushed back again

A bankruptcy auction designed to sell the Daily News and Inquirer to the highest bidder has been postponed indefinitely, while federal judges reconsider the ground rules.

The auction initially had been scheduled for today, but it's been twice postponed - first by U.S. District Judge Eduardo C. Robreno, who issued a critical ruling in the case last week, and then by the U.S. 3rd Circuit Court of Appeals, which agreed yesterday to review Robreno's decision.

Robreno ruled that a group of hedge funds, banks and other financial institutions, holding $318 million in debt secured by the newspaper assets, would not be able to use those IOUs in a bid for the newspapers - a practice known as credit bidding.

The Court of Appeals scheduled oral argument on the issue for Dec. 15 - likely postponing the bankruptcy auction until sometime next year, depending on how quickly the appellate judges reach a decision.