Chaos at the New York Post p.

By: George Garneau

Surrealistic sequence of events has staffers wondering what will happen next sp.

JUST WHEN IT looked as though the struggling New York Post would finally get maligned businessman Steven Hoffenberg as its new owner, along came an unexpected and more reviled new owner, plunging the paper from profound uncertainty into utter chaos?and closer to the extinction it has magically avoided for decades.
Despite the stakes for 700 employees, 438,000 readers and the city's public life, a series of fast and bizarre events transformed the Post into a surrealistic sequence from a Fellini movie. Anything might happen.
The latest crisis began when U.S. Bankruptcy Judge Francis G. Conrad reluctantly selected a late offer from New York parking lot and health club millionaire Abe Hirschfeld over the previously approved offer from debt collector Steven Hoffenberg, whose problems with the Securities and Exchange Commission forced him to bring Hirschfeld into the deal. The pair had a falling out, and Hirschfeld mounted his own bid and snatched the prize, so to speak, from his short-lived partner.
Though staffers were not thrilled with Hoffenberg, accused by the SEC of fraudulently peddling $400 million in unregistered securities, during six weeks at the helm, Hirschfeld inspired a rebellion.
He lost no time in living up to Hoffenberg's prediction that he would undermine the paper's news operation.
In an interview with the Washington Post, Hirschfeld admitted he did not want the newspaper?only its real estate. "I never intended to buy the Post," he said. "I'd be very happy with the building without the Post."
Within hours after taking management control March 12, Hirschfeld fired editor Pete Hamill, whom Hoffenberg hired three weeks earlier.
Then co-executive editor Gerard Bray quit after refusing to draw up a list of 270 employees to be fired. Hirschfeld then terminated over 80 workers, but reinstated most of them later in the day.
But the firings would not stand.
When Hirschfeld appointed as editor and co-publisher Wilbert Tatum, a controversial editor of the Amsterdam News, a strident weekly targeted to African-Americans, the newsroom revolted.
The Post failed to publish Monday March 15. The planned front page said: "Post staff to Abe Hirschfeld . . . GET LOST!"
The next day, in a maneuver unheard of in newspapers, the Post devoted virtually its entire news hole and editorial column March 16 to exposing the ugliest side of Hirschfeld. Staffers ignored their layoff notices dug up and exposed Hirschfeld's dark side to the public. The paper said Hirschfeld would kill it within days and asked readers to call him and ask that he sell the paper.
Later that day, Hamill defied his firing and returned to cheers in the newsroom to manage the St. Patrick's Day paper. Page One, highlighted in green, pictured Hamill with clenched fist raised with a headline: "HE'S BACK"
While the Post had for months avoided bankruptcy court even as its owner, Peter Kalikow, floundered in personal bankruptcy brought on by defaulted real estate loans, the Post on March 15 filed for Chapter 11 protection from creditors under the U.S. Bankruptcy Code.
It said it lost $7.8 million last year on revenues of $76.6 million and expenses of $84.4 million. Assets were listed at $18.5 million and liabilities at $32.5 million.
The filing protected the paper from Hoffenberg, whose Towers Financial Corp. lent the Post $6 million pending his planned takeover of the paper. His loans, secured by accounts receivable and other assets, make him one of the Post's largest creditors.
As E&P went to press, legal disputes were under way in state Supreme Court and in federal district and bankruptcy courts over ownership and control of the Post, founded in 1801 by Alexander Hamilton.
A hearing scheduled for March 19 in U.S. Bankruptcy Court could put the Post in play once again as Hoffenberg and an investment group including Leon Charney, who bid unsuccessfully for United Press International last year, planned a renewed effort to acquire the paper.
Post executives told reporters the paper was running out of operating cash and could make payroll only through the week ending March 20.
Hoffenberg vowed to sue Hirschfeld for breaching the contract the two signed to buy the Post together?before Hirschfeld mounted his own offer.
Bankruptcy Judge Francis G. Conrad, who said choosing between the two was like choosing between "two evils," picked Hirschfeld, who was supported by Kalikow and his creditors, because Hirschfeld had more money to guarantee liabilities than Hoffenberg, whose Towers debt collection agency has had its assets largely frozen pending the SEC's civil suit in federal court.
Conrad said he could not consider Hoffenberg's warnings that Hirschfeld could not afford to run the Post for more than a few weeks on the $3.4 million he agreed to invest and that he would tamper with the paper's editorial product. The court could only consider the Kalikow bankruptcy and its creditors, who sought to unload the Post's estimated $20 million in liabilities.
Hirschfeld, born in Poland in 1920, moved to Palestine in 1934 before emiigrating to New York, where he made millions of dollars in parking garages and the Vertical Club, one of the first of what would become an industry of health clubs.
Hirschfeld is prone to making wildly contradictory statements in a thick accent. He has said that he wants to save the Post, and that he wanted only its property and got "stuck" with the paper.
In testimony at bankruptcy court, Hirschfeld said he is known as "Honest Abe" and, though declining to quantify his net worth, said it is over $10 million.
The Post's roasting of him drew a different caricature. Columnist Jack Newfield said Hirschfeld tried to bribe him 15 years ago to keep his name off a list of the city's 10 worst landlords. He called Tatum's Amsterdam News "racist and anti-semitic."
Former New York Mayor Ed Koch said he turned down Hirschfeld's offer to be publisher of the paper and then quit as a columnist, saying, "I think they are destroying what was once a great newspaper."
The paper showed a television image of Hirschfeld spitting at Miami Herald reporter Bonnie Weston because of her coverage of his Castle Hotel and Resort's problems with Miami Beach building officials.
It also reported Hirschfeld's $120 million lawsuit against Herald parent company Knight-Ridder Inc. for alleged breach of contract for withdrawing a large luncheon from the hotel because of violations.
As E&P went to press, Kalikow was still listed as the publisher and neither the Post's real estate nor the stock in its operating company had been transferred to Hirschfeld, who was legally in charge of the paper under an operating agreement but for all practical purposes exerted little, if any, control over the newspaper.
In fact, Hirschfeld seemed to bask in the limelight, proud that the paper lampooning him sold so well.
Elsewhere, the SEC added the Post as a defendant in its suit against Hoffenberg and Towers, meaning the agency could seek to recover money from the Post to return to Towers bondholders, who, the SEC contends were cheated.
Also in bankruptcy court it was disclosed that Rupert Murdoch's News America Corp. was still liable for some pension funds until the end of May?five years after he sold the paper to Kalikow.
Hirschfeld agreed in court to put $3.4 million into the Post, and to guarantee $14.5 million withholding taxes that was taken out of paychecks but never forwarded to the government.
In order to accomplish the Post's ownership transfer, the paper's chief lender, Bankers Trust, agreed to reduce the mortgage on its prime South Street property in the Wall Street financial area to $15 million, from $25 million, and to transfer $19 million in debt from the Post to Kalikow's estate.