As reported earlier, Star Tribune Holdings Corporation and one affiliate (which publish the Star Tribune newspaper in Minneapolis, Minnesota) filed for bankruptcy today (more details on the bankruptcy filing can be found here). As is customary in large corporate bankruptcy filings, the companies also filed motions and applications for relief from certain bankruptcy code sections and rules in order to allow them to continue to operate their businesses. The following is a list of the companies’ first day pleadings filed thus far (follow the links to view the documents using netDockets):
- Voluntary Petition (Chapter 11)
- Motion for Order Directing Joint Administration of Chapter 11 Cases
- Motion for an Extension of Time to File Schedules of Assets and Liabilities, Schedules of Current Income and Expenditures, Schedules of Executory Contracts and Unexpired Leases and Statements of Financial Affairs
- Motion for (i) Waiver of Requirement for Filing List of Creditors and (ii) Authority to Establish Procedures for Notifying Creditors of the Commencement of the Debtors Chapter 11 Cases
- Motion for Authorization (i) To Pay Pre-Petition Claims of Critical Vendors and (ii) to Authorize Financial Institutions to Honor and Process Related Checks and Transfers
- Motion for Authorization to (i) Honor Pre-Petition Obligations to Customers and to Otherwise Continue Customer Programs and Practices in the Ordinary Course of Business and (ii) Authorize Financial Institutions to Honor and Process Related Checks and Transfers
- Motion for Authorization to Continue to Use Existing Cash Management System and Maintain Existing Bank Accounts and Existing Business Forms
- Motion to Continue and Renew Their Liability, Property, Casualty and Other Insurance Programs and Honor All Obligations in Respect Thereof
- Motion for Authorization to (i) Pay Pre-Petition Sales and Use Taxes, Employment Taxes and Other Similar Taxes and Fees and (ii) Direct Financial Institutions to Honor and Process Related Checks and Transfers
- Motion Pursuant to Sections 105(a) and 362 of the Bankruptcy Code for an Order Establishing Notification Procedures and Approving Restrictions on Certain Transfers of Interests in the Debtors Estates
- Motion to Establish Certain Notice, Case Management and Administrative Procedures
- Motion to (i) Grant Administrative Expense Status to Debtors Undisputed Obligations to Vendors Arising from the Post-Petition Delivery of Goods Ordered Pre-Petition and (ii) Authorize the Debtors to Pay Those Obligations in the Ordinary Course of Business
- Application to Employ Garden City Group, Inc. as Notice Agent and Claims Agent
- Affidavit of David W. Montgomery Pursuant to Rule 1007-2 of the Local Bankruptcy Rules of the Southern District of New York
- Motion for Authorization to (i) Pay Pre-Petition Wages, Salaries, Employee Benefits and Other Compensation, (ii) Maintain Employee Benefits Programs and Pay Related Administrative Obligations, (iii) Allow Employees to Proceed with Outstanding Workers Compensation Claims and (iv) Authorize Applicable Banks and Other Financial Institutions to Receive, Process, Honor and Pay All Checks Presented for Payment and to Honor All Fund Transfer Requests
- Notice of Proposed First Day Agenda
- Motion to (I) Authorize the Use of Cash Collateral, (II) Grant Adequate Protection to Certain Pre-Petition Secured Parties, (III) Grant Related Relief, (IV) Schedule an Interim Hearing Pursuant to Bankruptcy Rule 4001 and (V) Schedule a Final Hearing Pursuant to Bankruptcy Rule 4001
- Notice of Commencement and First Day Hearing
- Application to Employ Garden City Group, Inc. as Notice Agent and Claims Agent
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Star Tribune Holdings Corporation, publisher of the print and on-line Star Tribune in Minneapolis, Minnesota, filed for bankruptcy protection today in the United States Bankruptcy Court for the Southern District of New York. The Star Tribune is ranked as the 10th largest Sunday newspaper and the 15th largest daily newspaper by circulation (the paper had a daily circulation of 334,000 and a Sunday circulation of 552,000 as of the fourth quarter of 2008). The on-line version (www.startribune.com) ranks in the top 10 newspaper websites in the United States, with approximately six million unique visitors per month.
The company’s businesses were acquired from the McClatchy Company for $530 million. It is primarily now owned by Avista Capital Partners, LP and Avista Capital Partners (Offshore) LP. The company blamed its bankruptcy filing on a precipitous drop in advertising revenue for the entire domestic newspaper industry. According to the company’s first day declaration, print classified advertising was down by more than 25 percent in the first half of 2008, which represents a $1.8 billion loss in revenue for the industry. As a result, Star Tribune’s EBITDA (earnings before interest, taxes, depreciation and amortization) decreased from $59 million in 2007 to $31 million in 2008 (by comparison, 2004 EBITDA was $115 million).
The company also is highly leveraged and the decrease in revenue left it unable to cover its debt service obligations, despite negotiating $50 million in annual cost savings since 2007. The company has missed payments on its first and second lien credit agreements that were due beginning June 30, 2008. Despite those missed payments, neither the first or second lien lenders have accelerated their debt. The company has now filed for bankruptcy protection in order to attempt to rationalize its labor costs and delever its balance sheet.
UPDATE: The company has filed various “first day” motions and applications seeking relief from the bankruptcy court to allow the company to continue operating in the ordinary course. Details of these motions and applications (and access to copies of the documents) can be found here.
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Circuit City Stores, Inc. announced this morning that it intends to liquidate all of its assets and go out of business. The company had been conducting an expedited process to find a buyer for the company’s assets or a party willing to provide the company with additional funding to allow it to continue as a stand-alone going concern. Two days of auctions concluded late last night in New York.
In a press release, James A. Marcum, vice chairman and acting president and chief executive officer for Circuit City Stores, Inc., said: “We are extremely disappointed by this outcome. The company had been in continuous negotiations regarding a going concern transaction. Regrettably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders to structure a going-concern transaction in the limited timeframe available, and so this is the only possible path for our company.”
Circuit City has signed an agreement with retail liquidators Great American Group WF LLC; Hudson Capital Partners LLC; SB Capital Group LLC; and Tiger Capital Group LLC to liquidate the inventory in its 567 remaining stores.
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Further updating the progress being made in the sale or refinancing of Circuit City’s assets and operations, the Wall Street Journal reported late Thursday evening that three bidders remain in play. According to the Journal, San Francisco-based private equity firm Golden Gate Capital has emerged as the leading bidder, but is requesting 30 days to perform due diligence on Circuit City’s assets. Reportedly, Golden Gate’s bid is for the entire company.
The Wall Street Journal reports that Mexican entrepreneur and billionaire Ricardo Salinas Pliego, who acquired 28.5% of Circuit City’s stock after it filed for Chapter 11, is also still involved in the bidding process. He acquired approximately 28% of Circuit City’s stock after the bankruptcy filing. The final potential bidder for Circuit City’s assets is a combination of Hilco Merchant Resources and Gordon Brothers Retail Partners. Both companies are leading liquidation firms and their bid reportedly is premised on liquidating Circuit City’s assets through going-out-of-business sales.
Despite reporting that Golden Gate Capital has emerged as the leading bidder, the Wall Street Journal nonetheless stated that “liquidation . . . remains the likely scenario, according to people familiar with the situation.”
The entire Wall Street Journal article can be found here.
UPDATE: Circuit City announced today (January 16th) that it intends to liquidate all of its assets and go out of business. More details are available here.
This update provided by netDockets – the innovative new Precedent Research System for Corporate Bankruptcy.
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