By: E&P Staff A federal bankruptcy judge has refused at least for now a motion by the creditors of Creative Loafing to wrest control of the alternative weekly chain from its chairman and CEO Ben Eason.
In the bankruptcy court hearing in Tampa late last week, Judge Caryl E. Delano rejected a motion by Atalaya Administrative LLC asking to take ownership of Creative Loafing, which owes it $30 million. The proceedings in the court were reported by Wayne Garcia in his blog "The Political Whore" on Creative Loafing's Web site.
At issue in the hearing was whether the reorganization plan Creative Loafing submitted to the court earlier this month has any chance of succeeding. Judge Delano said the plan should be given some time to see if the plan is worth pursuing.
Another hearing was set for Jan. 21 on Atalaya's motion to lift the bankruptcy court's automatic stay prohibiting the lender from declaring Creative Loafing in default of the loan, which was used to partly finance the purchase of the Chicago Reader and City Paper in Washington, D.C. Atalaya contends continued operation by Creative Loafing's present leadership is shrinking the value of the chain -- and therefore its investment in it.
Creative Loafing's reorganization plans puts a preliminary payback to Atalaya of between $5 million and $15 million.
In the blog, Garcia quotes the U.S. trustee representing Creative Loafing's unsecured creditors as saying, "This debtor is really way under water."
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