Creative Loafing files for Chapter 11 bankruptcy protection

Creative Loafing, the Tampa-based company that owns alternative newspapers across the Eastern seaboard and the Midwest, filed for Chapter 11 bankruptcy protection this morning, according to public documents.

The filings list Creative Loafing Inc. and its papers in Tampa, Sarasota, Charlotte, Atlanta, Washington D.C. and Chicago, along with its stake in a newspaper in Birmingham, Ala.

Last year, the company announced a high-profile deal to purchase the Washington City Paper and Chicago Reader. One open question: Did the financial strain of closing the deal push the company into bankruptcy?

Despite a story on the Washington City Paper Web site quoting Creative Loafing Inc. president Ben Eason saying "this filing has little to do with the acquisition," documents included with the bankruptcy filing indicate the company had trouble keeping up with payments on a $40-million debt, including a loan taken last year to pay down $15-million in debts and to purchase the two newspapers.

Company president Ben Eason assured journalists and employees the filing was intended to buy time for completion of its national online advertising network using the Web sites of publications such as Creative Loafing in Tampa, the City Paper and the Reader.

“I’m filing (bankruptcy) because the economy sucks,” said Eason. “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.”

According to documents included with the bankruptcy filing, Creative Loafing missed an interest payment of $282,219 on Dec. 24, a $10,000 servicing fee on Dec. 31 and an interest payment of $294,369 due Jan. 24.

Also according to the documents, as the media economy grew worse, Creative Loafing negotiated agreements to modify the financing terms with Atalaya Funding in New York and BIA Digital Partners. But last week, Atalaya said the company was in default, though Creative Loafing disagrees, according to the court document.

Creative Loafing has asked the court to prevent Atalaya or Atalaya and BIA from taking control of the company, allowing Eason to focus on reorganizing to better meet its debt obligations and develop the online revenue sources prompting the Reader and City Paper purchases.

“The mood is hopeful here, more than it is doomsday,” said Creative Loafing Tampa editor David Warner, who expects now to focus more on generating material for the paper’s Web site. “There’s a lot of cautious optimism, is the best way to characterize it.”

According to the documents, Creative Loafing describes itself as the second-largest group of alternative publications in the United States, with 2-million unique visitors to its Web sites each month and 1-million print readers each week for six newspapers targeted to consumers aged 18 to 39.      

“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. I’d be dealing with the same economic issues if I did or did not buy these papers.”

But given the turbulence in the nation’s credit and financial markets, can Eason be sure completing the company’s online plan will bring the revenue it needs?

“We think so…this is an opportunity for a fresh start,” Eason said. “I don’t look at this as a failure or a (a sign) we haven’t been prudent or haven’t been smart.”   

Comments

[tim]

Notice how The Times refers to it as "Tampa's" Creative Loafing but themselves as "The Times" - even in Tampa? Now it can be referred to as one less advertising dollar The St. Pete Times will have to compete for.

[matoosa ferrera]

This obviously part of a wider conspirasey orchestrated by a right- wing linatic ant-obama racist republican uh, uhmm, ahhh, whatever....Know-whadImean?

[taxman]

CL has paid its taxes. You can't believe everything you read on/in the St Pete Times!

[King of the World]

Greg - Come on, now. You know it's all George Bush's fault.

[greg]

Gee....a company that promotes liberal ideals not paying their taxes and being fiscally irresponsible....maybe we can kick in a couple of billion to bail them out also. I am sure they will find a way to blame it on Jeb Bush, Brian Blair and Jim Norman....

[JimO]

Jessica,

With all due respect, if you have to ask that question, you probably ought to try reading Creative Loafing occasionally.

[Jessica Benjamin]

Joran,

With all due respect, how is Creative Loafing any different from "mainstream media"?

[helen]

I grew up on CL and fell in love with the WCP when I moved here.

Please, WCP, I love you are in print, I look forward to you each week.

Don't go awwwwwwwwaaaaaaaaaaaayyy!

[dankfu]

typo:
second to last paragraph.

it's "week", not "wek".

[dankfu]

typo:
second to last paragraph.

it's "week", not "wek".

[Joran Oppelt]

Rest easy ... Creative Loafing is not going anywhere and will continue forward, unscathed! I suggest you all read Wayne Garcia's blog post for yourself for all the details. We will continue to be a thorn in the side of the mainstream media, we will continue to provide you content via print, web, mobile (and more) and I look forward to seeing you all at any of our upcoming CL events in the community. Stay up, Tampa Bay!

[Soylent Green is People]

Ben "Polyanna" Eason on the bankruptcy: “I don’t see this as bad news.”

This is called spin.

1)Is he back on the crack?
2)Does he believe anyone's buying his spin?

[jb]

more people out of work,is it ever going to end ?

[james]

what a huge loss for this area---one of the best alternative papers in florida and the country---hopefully they can reorganize and resurrect, if not, yet another reason to leave this sinking ship called Florida---

[Soylent Green is People]

Actually, something HAS been posted now on the CL site.

And according to that item, the purchase of the two papers WAS a factor in CL's financial woes: "The debt load was substantially increased last year when Creative Loafing purchased the Chicago Reader and the Washington City Paper."

[Soylent Green is People]

Oddly enough, there's zilch news about this on CL's own site.

[Lin Young]

Well, although I was less than happy that the St. Petersburg Times cut newsroom staff and shrank the newshole, it was a wise course of action. At least the Times isn't in bankruptcy like Creative Loafing is. I can't believe that Creative Loafing wasn't paying its taxes, but that's what it looks like. Tooo crazy.

[Jessica Benjamin]

The only thing more pathetic than seeing "alternative" media ownership consolidating to make a greedy grab at barely existent national ad dollars is to see such attempts fail.

When "alternative" paper owners lose their independence, fail to serve the readers in their local communities, and no longer provide good jobs for their employees, they should hang it up and retire.

[dreaming]

well that sucks. as the tampa trib and sptimes have gotten thinner, ive looked more to cl of late for lifestyle stuff, not news of course.

as we have seen so often lately, however, bankruptcy does not necessarily mean the end of bizniz. here's hoping.

[Rex]

I wonder if those personal in Creative Loafing work??

BTW: Attractive, educated White Male in Saint Pete. D&D free - hates walks on the beach, but loves all women over 18.

[Eric]

Typo:
janitorial sevices should be janitorial services