Tierney Group Gets More Time in Philadelphia Newspapers Bankruptcy

By: E&P Staff

Philadelphia Newspapers LLC, the group that owns the bankrupt Philadelphia Inquirer and Philadelphia Daily News, will have the exclusive right to propose a reorganization plan until at least the end of January.

Bankruptcy Judge Stephen Raslavich, ruling on a motion brought by Philadelphia Newspapers in a hearing last Friday, extended the so-called exclusivity period to Jan. 31, 2010, or 30 days after a crucial appeals court ruling, whichever comes later.

Senior lenders, including Citizens Bank, CIT Group and Angelo, Gordon & Co., want to use the $318 million in debt they are owed to bid on the newspapers and Philly.com at auction. But earlier this month, a federal judge ruled that they could not engage in so-called “credit bidding” — a development seen as a major boost to Philadelphia Newspapers CEO Brian Tierney’s plans for the papers. The lenders are appealing the ruling to the Third Circuit Court of Appeals.

This summer, Tierney filed a reorganization plan that would sell the company to a group of three investors — Toll Brothers executive Bruce Toll, the Carpenters’ Union Pension Fund and Penn Matrix Investments – who would offer $35 million in cash plus the funding of a $17 million letter of credit. The senior lenders would take possession of the newspapers? office building in Philadelphia?s Center City, if they agreed to let the papers remain there rent-free for two years.

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