By: Mark Fitzgerald
Brown Publishing will go up for auction on July 19 with the opening bid coming from a three of the company’s top executives including President and CEO Roy Brown.
A U.S. Bankruptcy Court judge in Central Islip, N.Y., approved the auction procedure Monday, essentially giving the insider group, which formed Brown Media, nearly all they had asked for, though the date for bidding was pushed back slightly and Brown Media will have to put up a deposit with its auction bid.
Brown Media will make the opening bid of $15.9 million for the Cincinnati-based publisher, owner of 15 dailies, 32 paid weeklies, 11 business journals and numerous other publications. When Brown Publishing filed for bankruptcy May 1, it declared debts of it had debts $104.6 million and said its properties had a book value of $94.1 million.
Brown Publishing’s biggest creditor, PNC Bank NA, has indicated it will make a credit bid for the chain of $20 million. The bank is owed more than $70 million. Under the ruling of Bankruptcy Judge Dorothy Eisenberg, PNC will not have to put up a 5% deposit with its bid.
Bids are due July 16 at 2 p.m. EDT, with a hearing for approval of the sale scheduled for July 22.
Dolan Media Co., the publisher of business journals, said in court papers filed last month in the case that it is a potential bidder for the chain.
Other publishers have shown some interest in the newspapers. The official committee of unsecured creditors, who are likely to get nothing from the auction, has accused Brown Publishing of setting up a pre-bankruptcy sales process to discourage interest in the chain. The committee noted, for instance, that the real estate associated with Brown Publishing newspapers was sold to a separate company controlled by company insiders and Brown family members, and that the newspapers must lease at rents it claims were recently hiked above market rates. Brown Publishing also made it difficult to bid on separate properties, the unsecured creditors claimed.