Wave newspapers goes bankrupt: publisher owes creditors $5 million in debt.

When black media veteran Pluria Marshall Jr. bought Wave Community Newspapers in 2000, it seemed the papers would get a new lease on life. Now, one of the nation's largest chains of newspapers serving black and Hispanic readers faces an uncertain fate.

Last December, the company filed for Chapter 11 bankruptcy protection from about $5 million in debts it owes to about 160 creditors, according to U.S. Bankruptcy Court documents and the company's attorney, David B. Golubchik.

"This is just a bump in the road for the paper--we will still be here," says Marshall, Wave's publisher and CEO and founder of the National Black Media Coalition. "Nothing is going to change in the way that we run day to day."

Marshall says the Wave papers are profitable and the bankruptcy filing isn't indicative of financial problems at the Los Angeles-based company, which publishes six free black community weeklies and a Spanish-language paper with a combined circulation of 150,000. Neither circulation nor jobs are impacted, and the papers are continuing to publish as usual, he says.

According to Marshall, the bankruptcy was merely a business filing aimed at clearing up a $4 million loan that Wave's previous owners received from the Los Angeles Community Development Bank in 1999. Wave negotiated with them for more than a year and repaid $1.3 million before LACDB went into bankruptcy, he says Valley Economic Development Center was brought in to collect on LACDB's loans, but Marshall says the center "didn't want to work with us."

"In the real world, there is a give and take," Marshall says. "We will have to work this out through the courts because they were unreasonable."

However, Roberto Barragan, president of the Valley Economic Development Center, disputes Marshall's account and says Wave did not work to restructure or settle its debt with his group. "They weren't making payments for the last three years," Barragan says.

As part of the restructuring, Marshall plans to sell Wave's former headquarters for about $2 million and to use it to pay creditors. No bankruptcy plans have yet been decided by the courts, but Barragan says the building's sale won't be enough to settle debts with all of the company's creditors.

"[Wave] owes way more in excess of the building's worth," Barragan says. "Even after it is sold, it is still going to owe a large chunk of money."

Carl McGill, founder and chair of the Black Chamber of Commerce of Los Angeles County, calls the situation a tragedy. "The Wave is an icon and a very reliable source of information to this community. I have faith that the community can keep this newspaper."