By: Mark Fitzgerald
An auction of bankrupt Brown Publishing Co.’s assets, including 15 dailies and 32 paid weeklies, is scheduled for Monday, but it remained unclear how many parties are bidding for the Cincinnati-based company.
Just before the deadline for bidding passed Friday, the judge overseeing the Chapter 11 case ruled that Brown Publishing ‘s biggest creditor could bid using the debt it’s owed instead of cash.
The ruling by U.S. Bankruptcy Judge Dorothy Eisenberg in Central Islip, N.Y., would seem to ensure that there will be at least one more bidder in addition to the initial “stalking horse” offer by a company formed and owned by Brown Publishing CEO Roy Brown and two other company executives.
At the same time, the decision to allow credit bidding by PNC Bank may have had the effect of discouraging other bidders — an argument made by the committee of unsecured creditors who unsuccessfully pushed to prohibit PNC and the so-called “Bank Group” of creditors from making a credit bid. In documents filed in the case, PNC has said it intended to make a $20 million credit bid for the company. PNC is owed $74 million and so could presumably up that bid significantly in an auction.
Brown Media – whose sole owners are Roy Brown, Brown Publishing General Counsel Joel Dempsey and CFO Joseph Ellingham – made an opening bid of $15.9 million for the chain, which claimed a book value of $94.1 million when it filed for bankruptcy May 1. Brown Publishing listed $104.6 million in debts, and in papers filed last week said there were doubts it would remain a “going concern” after July 20 without a sale.
A hearing on the sale is scheduled for Thursday.