NEW YORK (Reuters) - Philadelphia’s two largest newspapers will go up for auction on September 23 after lenders failed to complete a $139 million takeover of the Inquirer and Daily News by Tuesday’s midday deadline.
U.S. Bankruptcy Judge Stephen Raslavich scheduled the court-supervised, all-cash auction at a Tuesday afternoon hearing in Philadelphia bankruptcy court, a spokesman for the newspapers’ owners said.
Philadelphia Newspapers LLC, which owns the papers and has operated under Chapter 11 bankruptcy since February 2009, hopes to close a sale by October 12, court papers show.
A lending group including investment firm Angelo Gordon & Co and a unit of Credit Suisse Group AG had hoped to buy the papers, after outbidding an investor group that included financier Ronald Perelman at an April auction.
That takeover, however, was conditioned on reaching various agreements with 16 unions, and was scuttled by a dispute with drivers represented by the Teamsters.
John Laigaie, president of Teamsters Union Local 628, said drivers objected to efforts to switch their retirement plan to a 401(k) from a traditional pension plan.
The judge is not requiring this dispute to be settled for a sale to go forth, according to Laigaie.
It was not immediately clear whether the previous bidders might submit new bids in next week’s auction. An Angelo, Gordon spokesman declined to comment. A spokeswoman for Perelman declined to comment.
Lawrence McMichael, a partner at Dilworth Paxson LLP representing Philadelphia Newspapers, said the newspapers will continue operating normally.
Philadelphia Newspapers filed for bankruptcy protection in the face of falling advertising and too much debt.
A group led by public relations executive Brian Tierney had bought the company for $515 million in 2006.
Other newspaper companies also have struggled in the recession as advertising falls and readership declines.
Tribune Co, the publisher of the Chicago Tribune and Los Angeles Times, has been in bankruptcy since December 2008, a year after real estate developer Sam Zell acquired it through an $8 billion leveraged buyout.
Its reorganization has been delayed by battles among creditors who have lost billions of dollars.
The case is In re: Philadelphia Newspapers LLC, U.S. Bankruptcy Court, Eastern District of Pennsylvania, No. 09-11204.
Reporting by Jonathan Stempel and Jennifer Saba in New York; Additional reporting by Chelsea Emery in New York and Tom Hals in Wilmington, Delaware. Editing by Robert MacMillan and Carol Bishopric
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