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Judge Defers Creative Loafing Auction Rule Until Aug. 25 Sale.

Wednesday's Bankruptcy Court heading in Tampa, Fla., was supposed to a critical day to determine the future ownership of bankrupt alternative weeklies publisher Creative Loafing.

But according to an account by Wayne Garcia, blogging for the Creative Loafing Tampa newspaper, Judge Caryl E. Delano deferred a key decision on determining who has the "highest and best offer" until the scheduled Aug. 25 auction of the chain's equity.

There are two bidders so far. Creative Loafing CEO Ben Eason heads a group that includes family members and BIA Digital Partners, a creditor that put up $10 million to help fund the 2007 purchase of the Chicago Reader and Washington City Paper that ultimately forced Creative Loafing to seek bankruptcy protection.

The second bidder is Creative Loafing's biggest creditor. Atlanta-based Atalaya Capital Management loaned $30 million to fund the alt-paper transactions.

In the wrangling over rules for the auction, Eason's group wants "in-kind" offers, such as its offer of free office space to Creative Loafing, to count as part of a winning bid. Atalaya, which has made an initial offer of $2 million in cash, argued in court Wednesday that all-cash bids should be considered superior.

Garcia wrote that the biggest news to emerge from the hearing was that Eason is considering stepping down temporarily as CEO to concentrate on the auction bid.

"There is this big fight about [my] fiduciary obligations," Eason said after the hearing. "It's just a very tricky sort of thing."

Eason told Garcia he has not yet made the decision about stepping down, and has set no deadline for it.

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Title Annotation:Judge Caryl E. Delano
Publication:Editor & Publisher
Article Type:Brief article
Date:Jul 30, 2009
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