Creative Loafing, the Tampa-based company that owns six alternative newspapers across the Tampa Bay area, along the Eastern seaboard and the Midwest, filed for Chapter 11 bankruptcy reorganization Monday morning.
The filings include Creative Loafing's papers in Tampa, Sarasota, Charlotte, N.C., Atlanta, Washington, D.C., and Chicago, along with its stake in a newspaper in Birmingham, Ala. The company cited debts of $10-million to $50-million and assets of $10-million to $50-million.
Company president Ben Eason assured journalists and employees the filing was intended to buy time for completion of a national print and online advertising network.
Creative Loafing also filed suit Monday against some of its biggest creditors, trying to stop a default that might allow those creditors to take control of the company.
According to the suit, the worsening media economy made it tougher for Creative Loafing to pay on $40-million in debt, including a $30-million loan taken in part to buy the Chicago Reader and Washington City Paper.
Eason blamed a lousy economy. "The question is, how do we emerge from bankruptcy with a fresh start and everybody getting their debts settled? We believe the answer is in finishing off our digital strategy."
A judge will decide if the strategy is the best way to satisfy the debt of Creative Loafing, which Eason's family founded in 1972. But the immediate result for staffers is that reductions planned to help the company meet debt obligations are now on hold, Eason said.
"The mood is hopeful here, more than it is doomsday," said Creative Loafing Tampa editor David Warner. "There's a lot of cautious optimism."
Last year, Creative Loafing announced a high-profile deal to purchase the City Paper, the Reader and the Straight Dope Web site, amid sharp questions from critics over whether the Tampa company could handle the transition. As the media economy grew worse, Creative Loafing negotiated agreements to modify the financing terms with its financial backers, Atalaya Funding and BIA Digital Partners. Last week, Atalaya said the company was in default.
Did the City Paper/Reader deal push the company into bankruptcy?
"If the economy was the same now as it was when we put the deal together, we would have hit all our financial objectives and we'd be Wall Street's darling," Eason said.
But despite turbulence in the nation's credit and financial markets, Eason was confident the restructuring would work. "I don't look at this as a failure,'' he said, "or (a sign) we haven't been prudent or haven't been smart."