Philadelphia Inquirer Owner Wins Right to Keep Control of Reorganization

Philadelphia Newspapers LLC, the owner of the Philadelphia Inquirer and the Daily News, will remain the only party allowed to submit a reorganization plan for the bankrupt publisher until April 30, a judge ruled.

U.S. Bankruptcy Judge Stephen Raslavich today said he would grant the company a “bridge extension” of its exclusivity period, barring anyone else from offering a rival restructuring proposal. The company had sought to extend the period through May 25, the scheduled date for confirmation of its current reorganization plan.

The exclusivity issue should be delayed until after the company’s April 27 auction, Raslavich told lawyers during a hearing in Philadelphia. If secured lenders, owed more than $300 million, are successful bidders at the sale, then their objections and those of the unsecured creditors committee to the company’s plan might be moot, Raslavich said.

Senior secured lenders plan to submit a cash bid for the company. A federal appeals court upheld a lower-court decision that bankruptcy law doesn’t entitle Philadelphia Newspapers’ secured creditors to bid what they are owed at a public auction.

The auction is central to the company’s reorganization plan filed in August. The plan calls for selling assets to investors led by Bruce Toll, vice chairman of homebuilder Toll Brothers Inc. Under the plan, senior lenders would be paid about $60 million in cash and property for their debt.

The case is In re Philadelphia Newspapers LLC, 09-11204, U.S. Bankruptcy Court, Eastern District of Pennsylvania (Philadelphia).

To contact the reporter on this story: Sophia Pearson in Wilmington at spearson3@bloomberg.net

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