ADN can pay carriers, but fate of the paper still unclear
The state's largest newspaper can pay its carriers, but a bankruptcy judge has not made a decision on the proposed financing agreement by its potential buyers trying to save the paper.
The Alaska Dispatch News and The Binkley Company outlined its reasons for the DIP Financing Agreement to Judge Gary Spraker Thursday, but Spraker only approved a motion to allow ADN to pay $80,000 to its newspaper carriers using its accounts at Northrim Bank. The Binkley Company seeking to buy ADN wants to loan $1 million to the paper for the next few weeks to fund operations and pay for employee's health insurance premiums under Premera. The court hearing will resume on Friday at 1 p.m.
Ryan Binkley, CEO of The Binkley Company, said in court that they had offered ADN owner Alice Rogoff $1 for the paper during their first few conversations, but it wasn't accepted. However, when ADN filed for Chapter 11 bankruptcy protection last Saturday, that's when the $1 million loan agreement was drafted. Rogoff testified in court by phone, answering questions over the paper's finances.
On Wednesday, the U.S. Trustee with the Department of Justice had filed an objection to the loan agreement, since the proposal protects Binkley's investments above those of other creditors. The U.S. Trustee Program is the component of the U.S. Department of Justice that oversees the administration of bankruptcy cases. Acting U.S. Trustee Gail Geiger said most parties in interest “have not been given notice of the case or the first day motions.”
“Hence, the United States Trustee will oppose action that substantively affects parties’ rights on a final basis,” Geiger wrote. She also cited concern Binkley could refuse financing at its own discretion.
However, Erik Leroy, attorney for The Binkley Company, responded in court filings saying the objections "do not adequately account for the risks the Binkley Company is undertaking here."
While The Binkley Company will continue talking to vendors and strive to not turn away any other potential buyers, Leroy said, "it is still excavating its way through the Debtor's contracts and financials and needs to be able to say at any time, 'the numbers just won't work, and it is time to fold.'"
The Municipality of Anchorage also filed an objection after the hearing, citing how ADN owes more than $56,000 in business personal property taxes. Arctic Partners LLC, the company that leases the printing facility on Arctic Boulevard to the paper, is also objecting. ADN owes more than $600,000 in mechanic's liens on the property and has not paid rent for July and August.
ADN's attorney, Cabot Christianson, is confident the judge will approve the financing agreement.
"It's obviously going to depend on some things that haven't happened yet but it's looking good," he said. "It seems to me that everyone wants the newspaper to stay in business to pay the employees."