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Update: San Francisco and City Pages

[Note: See update below.]

After months of resisting, I posted last week about the unlikely possibility that a San Francisco court could force Village Voice Media to sell City Pages. Since then, VVM has published its side of the story, which I wanted to pass along.

The brief re-recap: The Bay Guardian, rival to VVM’s SF Weekly, won a predatory ad-pricing judgment that has since grown to $21 million. While the case is on appeal, the trial court has allowed the Guardian to seize a few thousand bucks of the Weekly’s assets. The Guardian says it could get a lot more — including VVM’s chain of alt-weeklies — to satisfy the judgment. The chances of such a sweeping seizure, however remote, go up because VVM has not posted an appeal bond.

VVM’s explanation? You can’t get blood out of a turnip. Execs note an appeal bond would cost $30 million, adding that the Weekly and its holding company, New Times Media, have “zero” cash. Further, they assert, a state court won’t be allowed to grab VVM’s non-California assets. Even if the court somehow breaches that organizational protection, VVM’s assets are largely mortgaged to the Bank of Montreal, which would have first claim if the Guardian’s award forces its rival into bankruptcy.

Given the remote chance of a meaningful Guardian victory, VVM seems content to refuse payment and accept the Guardian picking off a few low-level San Fran assets like trucks and sub-leasor rent checks.

Update: Bloomberg News is reporting that VVM has asked a Delaware judge to keep various company-chartered entities there off-limits from the Guardian. The Guardian, meanwhile, claims VVM had $191 million in assets in 2007; that value could have dropped substantially given the last two revenue-punishing years.

Obviously, a court has to sort all this out and VVM has consistently lost so far. I’ll keep you posted if this moves from remote to real.

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