August could bring word, at last, of who will run the Star Tribune if Minnesota’s largest newspaper successfully emerges from Chapter 11 bankruptcy as it claims it can do.
A new CEO and a board of directors for the post-bankruptcy newspaper are to be named at least 10 days before the deadline for creditors to vote on the Star Tribune’s reorganization plan, according to documents the newspaper’s lawyers filed this week in U.S. Bankruptcy court in New York.
The documents suggest a voting deadline of Sept. 3, which means disclosure of the top management could come in less than four weeks.
Chris Harte, the current publisher and chairman, said in June that he will leave the company before it emerges from bankruptcy. The current owners, Harte’s family trust and Avista Capital Partners, also will be out of the picture.
A clearer timetable for crucial next steps in deciding the Strib’s fate should come after a hearing scheduled for today in the New York court. The Star Tribune is set to seek approval of its “disclosure statement,” which lays out the company’s reorganization plan and related information.
If Judge Robert Drain deems the statement and proposed voting procedures to be adequate, the newspaper can solicit the creditors’ votes and move toward disclosing the new management team.
The Star Tribune asked the court Monday for an extension of its exclusive control over the process. Its exclusive right, blocking any competing plans creditors or others may wish to file, was set to expire Aug. 13. The newspaper wants until Oct. 12. The extension could set the process of soliciting approval from creditors into December.
But the Star Tribune stressed in its request for the extension that it doesn’t expect to need the extra time and was seeking it only out of “an abundance of caution.”
Meanwhile, the Strib enters this final phase of the process it started in January with loose ends yet to tie up — some potentially serious, some maybe not so.
Even after extracting big concessions from nine of its 10 unions, Harte said in a court document filed on July 23 that the company’s financial performance in June was “difficult.” Net revenue for the month was $14.99 million while operating expenses totaled $15.44 million for a net loss of nearly half a million, he said.
Further, Harte said, “the substantial decline in the Star Tribune’s advertising revenue continues, as is the case for the newspaper industry as a whole.”
The documents the court will review today say creditors can do considerably better by reorganizing than they would do by liquidating the company and extracting what cash they can from it. But you have to wonder what level of operating loss would tip the balance the other way.
Hold out union
One union has not agreed to the Strib’s concession demands, the International Association of Machinists and Aerospace Workers, which represents 16 printing plant workers. The sticking point is the company’s insistence on withdrawing from the union’s pension fund and offering the workers 401(k) plans instead.
The company has asked the bankruptcy judge to toss out its contract with the union.
The U.S. bankruptcy trustee, who monitors such cases for their adherence to the law, objected last week to a Star Tribune proposal related to the company’s exit plan. The proposal would broadly protect Avista, the Harte family trust and the company’s employees and affiliates from legal liability.
Both sides appear prepared to postpone any showdown over the issue for now. A document the newspaper’s attorneys filed Monday said they have agreed to deal with the objection in connection with confirmation of the newspaper’s reorganization plan rather than with the issues set to come up today in court. A confirmation hearing is scheduled for Sept. 17.
Sharon Schmickle can be reached at sschmickle [at] minnpost [dot] com.