The owners of Orange County Business First have halted temporarily the publication of the weekly business newspaper while they seek U.S. Bankruptcy Court approval for the sale of the operation.
James H. Smith, who heads an Irvine partnership that owns the paper, said Monday that the partnership will ask a bankruptcy judge on Wednesday to approve the sale. But Smith declined to reveal any details, including the identity of the buyer or the proposed purchase price.
Issue Dates Missed
Business First, which distributed 24,000 papers when it last went to press, has not published an issue for either last week or this week. Smith said the June 19 and June 26 issues would be printed if the sale is approved.
The partnership, called Orange County Businessweek, filed Nov. 2 for protection from creditors under Chapter 11 of the federal bankruptcy laws. The filing allows it to continue operating as it tries to come up with a plan to pay off creditors.
Smith's effort to sell the newspaper may meet with some resistance from the U.S. trustee's office, which has been appointed by the court to review the reorganization plan.
The trustee's office is recommending that the bankruptcy petition be converted to a Chapter 7 proceeding so that the company can be liquidated or that the petition be dismissed, leaving the partnership and its principals at the mercy of their creditors.
In court documents, the trustee's office claims that the firm hasn't been paying off old debts, is continuing to lose money and hasn't filed an adequate reorganization plan.
Court documents show that the partnership has $1.3 million in debt and only $169,000 in assets. Based on those figures, creditors would get 13 cents on the dollar, at most, in a liquidation.
Since its November filing, the partnership has been losing more than $30,000 a month for a total loss of $246,000, court documents show. The losses have continued even though the paper has laid off a number of employees, and some top managers, including Editor Chuck Loos, have been working without pay.
The paper's three largest unsecured creditors--its printer, accountant and landlord--were owed a total of $106,000 at the time of the filing.
A June 19 document filed by Business First stated that owners have been negotiating for the sale of the paper to a "major publishing entity which owns several similar publications."
But Arthur N. Marquis, a U.S. trustee on the case, said he was told by a company lawyer late last week that no agreement had been reached. He said he also was told that the partnership had no objection to liquidating the company.