Judge Dismisses Effort to Make Newspaper Quality an Issue in Morris Publishing Bankruptcy

By: Mark Fitzgerald

The federal judge overseeing the prepackaged bankruptcy of Morris Publishing Group on Thursday refused to allow two Florida community activists to force the court to consider the issue of the quality of the chain’s newspapers.

Judith Seraphin and Ed Slavin, principals in a St. Augustine, Fla., business that wraps buildings for construction purposes, had asked U.S. Bankruptcy Court Judge John S. Dalis to let them intervene in the case and object to the confirmation of the bankruptcy.

They argued that alleged “Morris family mis-management” had led to a decline in quality of its papers, including the St. Augustine Record. Seraphin and Slavin cited a comment in Morris’s bankruptcy announcement on Jan. 19 that the prepackaged plan of reorganization would bring “no change” in the company’s day-to-day operations. That, they said, meant Morris would not improve its papers.

Normally, the only parties who object to a bankruptcy plan are creditors.

In a 13-page opinion, Judge Dalis said the pair had no standing to object as “parties of interest” because they have no economic interests at stake, nor did they show there was a reason to be concerned a Morris bankruptcy would set a bad precedent.

“Further, they do not have standing to object on behalf of the debtor’s bondholders, and they have not alleged, much less shown, cause why they should be allowed to intervene,” he wrote.

Morris’ plan for reorganization was approved in advance by holders of 93% of $278 million in bond debt. They will swap those notes for $100 million in new notes carrying a higher interest rate.

Morris is likely to emerge from bankruptcy next Wednesday, Feb. 17, when a confirmation hearing on the plan will be held.

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