Will Report for Food: Tales of an unemployed journalist

The final chapter is closing in on the 10-month soap opera that is the Creative Loafing bankruptcy case. Today, Tampa bankruptcy court Judge Caryl E. Delano tentatively approved the bidding procedures of the upcoming new equity auction on August 25. Based on the winner of that auction, Creative Loafing will emerge from bankruptcy with or without new owners.

Despite media reports to the contrary, this hearing was not CEO Ben Eason’s “D-Day.” The hearing only centered on the rules for qualified bidders of the auction, not how the winner of the auction will be chosen. Judge Delano reserved that battle for Aug. 25.

That day should be a long one for Eason, who filed for bankruptcy nearly a year ago after an ill-timed purchase of the venerable alt-weeklies Washington City Paper and Chicago Reader. Eason, along with money from his family and another creditor, BIA Digital Partners, plans to bid at the auction. Eason’s biggest creditor, Atalaya, is the other known bidder and has seemingly deep pockets.

After the hearing, Eason told reporters he still has the advantage in the case. He acknowledged Atalaya’s large stalking horse bid, but says money won’t mean everything in the judge’s decision.

“The question is: Will [Atalaya] operate the business?” he said.

Eason and his family’s new lawyer, Mariaelena Gayo-Guitian (more on that below), believe Atalaya will liquidate some of the papers in the Creative Loafing chain. “I think that would be the case,” Gayo-Guitian said. “They have no media experience.”

In past court hearings, Atalaya’s management said they don’t plan to liquidate the second largest alt-weekly chain in the nation. In fact, they’ve told media outlets they would invest more money in the company. Remaining employees of the paper don’t seem thrilled about either choice.

“I guess the question is whether it’s better to be under the control of hedge fund managers or our current arrangement,” Washington City Paper editor Erik Wemple told Mediabistro recently. “That’s the topic of somewhat pointless debate around here.”

Many Creative Loafing employees have not minced words about how they feel, openly mocking Eason, the company and the Tampa paper in particular.

Although nothing major changed in the hearing, parties argued in court for about two hours. The Eason family recently retained a lawyer, in addition to the Creative Loafing company’s counsel, who objected to the swift time frame of the auction. She also brought up questions about Atalaya’s ability to pay itself back for whatever bid it makes — possibly up to $30 million. A lawyer for BIA, another creditor, agreed: “It’s like taking money from one pocket and putting it another.”

The judge would not change the already agreed upon Aug. 25 auction date nor discuss what would qualify as bids. She only entertained a few minor changes of the bidding procedures, such as a requirement that all bidders place down a $250,000 deposit to participate.

Interesting side note: As I posted before, this auction is open to third parties, which has prompted some debate about possible bidders. The Sunday Paper? Village Voice Media? The St. Petersburg Times? If anyone has some info, let me know.

But maybe the most shocking tidbit from the hearing: Ben Eason mentioned he might temporarily step down as CEO of Creative Loafing to work on his bid for the company. “We’ve been talking about it,” he said.

Full Disclosure: I worked at Creative Loafing Tampa from 2006-2009.