Dial tones for debtors

MediaNews Group, doing business under the name Affiliated Media, is set to enter bankruptcy court on March 4. Before it does, it has made a few requests of the judge in the case. First, the company doesn't want to have to sign checks "Debtor-in Possesion." Second, and more important to people working in the chain's newsrooms, it wants to keep the phones and the Internet working.

From the Denver Daily:

MediaNews asked Judge Kevin J. Carey in a 23-page brief that “the debtor (MediaNews) cannot continue its operations without the continued services of the utility provider. Any disruption of the utility services supplied by the utility provider, for even a brief period, would be extremely costly to the debtor and harmful to its business.”

(Found via Westword)

Irony

As the one-year anniversary of Tribune Co.'s Chapter 11 bankruptcy filing approaches, company owner Sam Zell has some advice for the government about debt.

From CNBC:

The US government will have to cut down on borrowing by giving up on some publicly-financed programs or face inflation in one or two years, Sam Zell, chairman of Equity Group Investment, told CNBC Tuesday.

"I do believe that the current administration is insensitive to the risks of the scale of debt we're creating," Zell told "Squawk Box."

If things do not change, it is "very hard to imagine" that the US is not going to be confronted with inflation in one or two years, he said.

Bondholders call Trib purchase a bankrupt deal

The bondholders who helped gave Sam Zell the leverage to takeover Tribune Co. through a massive borrowing scheme now say the deal was fatally flawed from the start. In other words, Tribune was destined for bankruptcy court before the ink dried.

The technical term for all of this is a "fraudulent conveyance," but I'm sure Tribune Co. employees can think of a few less jargony terms.

The bondholders might ask the bankruptcy judge to appoint an independent investigator to look into the deal to see if senior lenders, such as JP Morgan, and Tribune managers sold them a bill of goods.

From the Wall Street Journal:

Such allegations can be difficult to prove, entangling opposing bankers and lawyers in a debate over what was a proper valuation at the time of the deal. "Insolvency is an easy concept to state but a difficult concept to prove," said Bill Welnhofer, managing director and head of restructuring at investment bank Robert W. Baird & Co. in Chicago.

The bondholders' filing seeks disclosure of emails, interviews and internal memos used by Tribune, its financial advisers and its lending banks. It requests information about what is known as a solvency opinion -- an independent evaluation of a company's ability to pay its debts following the assumption of debt.

Tribune Co. said it had every reason to believe at the time of the deal it could manage the debt; things just turned out worse than expected.

Downgrades at NYT, McClatchy

Moody's has lowered the debt ratings for two of the country's largest newspaper companies, McClatchy and New York Times Co. The New York Times, which suffered a $74.5 million loss in the first quarter, drops to a B1 rating. McClatchy, which lost $37.5 million in the first three months of the year, slipped to Caa1.