Tyler Olsen, publisher of the Fraser Valley Current in British Columbia, has again provided an update on the bankruptcy court proceedings of Black Press, owner of the Honolulu Star-Bulletin and more than 100 other newspapers in Western Canada, and Washington. (“Why the US government may block sale of BC newspaper chain / US feds want to stop BC-based Black press from walking away from US pension debts”).
The U.S. Pension Benefit Guaranty Corporation, a federal agency that steps in to protect pensions when employers go belly up, has filed a motion signalling that it may intervene to block any offer presented in a Canadian court that doesn’t include at least some portion of the $45 in pension benefits it took over when Black Press sold the Akron Beacon-Journal at a huge loss but retained the pension obligations.
According to the filing, Black Press was in negotiations with the PBGC for nearly two years without reaching agreement. During that time, Black Press failed to notify the agency that it was seeking buyers for its properties, and considering seeking protection from creditors.
Black Press has a “stalking horse offer” to purchase all of the company’s assets if no other bidder emerges in an auction that ends this week. But that officer, disclosed in court filings, would leave the debt to the PBGC unpaid, something the agency is not likely to allow without a legal fight.
It’s proposed remedy would be to give the federal bankruptcy court in Delaware control over the fate of at least part of the Black newspaper business that are in the United States, the Star-Advertiser and its community newspapers in the Pacific Northwest.
These are clearly American businesses, the agency argues in their motion, which package and market local news in their local communities. In addition, the government notes, Black Press made previous attempts to sell them as separate operating entities, undercutting the argument that they are just appendages of their Canadian-based parent company.
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So, does this mean that at some point in the near future, the Star Advertiser will just be gone?
The only way that the paper will survive in any useful form will be if a mega-rich person buys it for the glory and not with any hope of making money. “You’re right, I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars next year. You know . . . at the rate of a million dollars a year, I’ll have to close this place in sixty years.” –Charles Foster Kane in Citizen Kane
Ian, I like to see your thoughts on what happens next, since the following has happened.
As you said The US Pension Benefit Guaranty Corp filed a motion to prevent the court from allowing Black or its successors to forfeit it’s obligation on the Akon pension fund and the Delaware court has affirmed that motion.
The Stalking horse proposal has a termination clause that allows Carpenter media to terminate that agreement if the court denies the forfeiture of the fund.
Now what do you think will happen?