Today was to be the day the suburban Sun newspaper chain was auctioned off, as part of the bankruptcy of its parent, American Community Newspapers. However, at ACN’s request, any sale was delayed until at least June 2 — and possibly longer, if the company’s unsecured creditors get their way.
The company’s lenders, Bank of Montreal and General Electric Capital Corp., are poised to buy ACN for $32 million, plus $5 million in bankruptcy financing they provided. ACN carried $136 million in debt into Chapter 11. Court records indicate the lenders will get ACN without an auction, since no qualified rival emerged by the May 26 deadline.
ACN did receive a bid for part of the company, but rejected it since lenders proposed to acquire everything. It’s unknown exactly which part of ACN was in play; in addition to the Twin Cities, ACN has operations in Dallas-Ft. Worth, Columbus, and suburban Washington, D.C. The company’s spokesperson did not return an email for comment.
The company’s unsecured creditors — mostly ACN vendors — filed a motion Wednesday to delay the sale, charging that the company misrepresented its willingness to pay overdue bills.
The motion states that ACN repeatedly urged the court to approve the relatively speedy auction procedure because the new owners would cover “substantially all of the trade payables.” But after the court approved the process, the lenders instead proposed “to pay a small pro rata portion of the prepetition trade payables … conditioned on various factors.”
Delaware Chief Bankruptcy Judge Kevin J. Carey is scheduled to rule on that motion next Tuesday; he could also sign off on the sale that day.
ACN has said the day-to-day operations of its papers are unaffected by the legal goings-on.