A few questions and some answers about the Star Tribune bankruptcy, as we see whether the state's biggest newsroom will be preserved.

Will I still get my paper?

Yes. The battle moves to a New York bankruptcy court, but in the short term this doesn't affect newsroom operations. It is as it was.

This isn't Chapter 7 liquidation, where you close the business and sell off everything to pay back as much as you can to creditors. As battered as the Strib's finances are, it's still worth more as an operating business. The goal is to preserve as much of that value while punishing employees and creditors the least.

Who owns the paper?

Avista Capital Partners, a New York investment firm that bought the Strib in February 2007 for $530 million, owns 95.88 percent. Chris Harte, the paper's publisher, owns 4.11 percent.

How much is their investment worth now?

Nothing. Avista announced recently it has written off all of the money it put into the deal. We don't know about Harte, but unless he's in denial, he's zeroed out his balance sheet, too.

So they have nothing to lose. Why do they care what happens now?

Here's the word from two experienced local bankruptcy lawyers with no specific knowledge of the Strib's situation:

Thomas Wallrich of Hinshaw & Culbertson says just because owners have written off their investment doesn't mean they don't own it; it just means their stake has no value.

Katherine A. Constantine, the chair of Dorsey & Whitney's Bankruptcy Practice group, says that even officers of a broke company have a fiduciary duty to maximize return to the creditors (the folks the business owes money to). 

OK, who do the owners owe money to?

The bankruptcy filing lists 30 unsecured creditors — entities that won't get paid — but they are relatively small beans. The people with a lot to say about the Strib's future are the folks who own its debt. They're the ones who will want, if not 100 cents on the dollar, as much as possible. We still don't know who they are, though the international bank Credit Suisse is often mentioned.

How much does the paper owe?

According to a story in Thursday's editions, the Strib has liabilities of $661 million, compared to assets of $493 million.

I've read that the paper's profitable. So why can't it pay off its debt?

It's not that profitable. The paper says it made $26 million in operating profit in 2008 — but that doesn't include interest payments on that massive debt (or taxes). And the Strib began missing interest payments in the middle of last year.

Although we don't know for sure in the Strib's case, typically when corporations default on debt repayment, their interest rate gets hiked. Like when you fall behind on your credit card, the debt piles up, you get further behind and eventually you have to work something out with your lender.

You keep talking about preserving the newsroom. Don't those folks have contracts? How safe are those in bankruptcy?

For hundreds of workers, that's the $64,000 question. Notes Constantine, "In bankruptcy, collective bargaining agreements have more protection; they're in a special category. But they're still subject to the debtor" — the owners — "asking the court for a better [labor] deal."

Before a court can reject an existing contract, management must propose a good-faith alternative that assures "all creditors and affected parties are treated fairly and equitably" which labor rejects without good cause. The contract can also be voided if other parties (such as creditors) have made "commensurate" concessions.

Wallrich says when he was a young lawyer, "courts never let you overturn" an existing deal, the kind the Strib's major unions all have. "But my personal experience in the last three years is that courts, especially in bankruptcy cases, allow extreme modifications. Within the last five years, if I had collective bargaining agreements to modify, I'd go to bankruptcy court."

Wallrich says newer agreements make it easier for labor to show they've dealt in good faith. Newsroom union leaders feel they're well-positioned, not only because they agreed to concessions this summer, but offered over $2 million in cuts last month. (For more, click here.) Management, demanding bigger givebacks, turned that down.

What happens to the creditors?

They know they'll get less than the value of what they're owed; some original lenders have cashed out by selling Strib debt at a discount to other investors. But whoever now holds the notes will want as much as possible. You may hear about a "debt-for-equity swap," where the creditor becomes the owner in exchange for writing off some portion of the debt they'll probably never collect anyway.

What's your prediction?

This is worth what you paid for it, but I'm guessing the Strib's blue-collar unions, especially Teamsters representing pressmen, drivers and mailers, will get pummeled more than the newsroom. They rejected summertime concessions (and paid for it with layoffs), and are being asked for deeper wage cuts. Their jobs are tied to a print edition that is on the wane. Their resistance is stronger, but their position might not be, at least to a judge.

I hope the creditors get wiped out — sorry guys, you backed the wrong ownership — but can't believe that will actually happen. And Avista will retreat to its happy place of off-shore drilling and medical products, remembered much like Norm Green.

What do readers think?

I couldn't resist adding this one, since it looks like the Strib removed commenting privileges from its bankruptcy story. But you're welcome to comment here.

What scenario should I be rooting for?

Frankly, for preserving jobs and whittling debt down to nothing, or at least to a manageable level for a news giant trying to survive a tough ad climate as it shifts to the lower-revenue Internet. However, creditors and the courts might not see it the same way we do.