Rogoff attorney files proposal for auction sale of Alaska Dispatch News
Alaska Dispatch News owner Alice Rogoff’s attorney is proposing to hold an auction for the sale of the newspaper at an upcoming bankruptcy hearing Sept. 11, and spelled out a path forward for employees at the deal’s conclusion.
The Binkley Co. is loaning Rogoff $1 million for paying off immediate debts that allow the newspaper to continue operations. That amount converts to a purchase price, if they are the highest bidder, under the proposed terms. But if another entity offers more, the Binkleys will be reimbursed $100,000 of their expenses, plus paid 3 percent of the purchase price.
If an interested buyer steps up to buy the Dispatch on better terms than the Binkley Co., is offering, Rogoff proposes certain auction ground rules in the Sept. 5 filing with the federal bankruptcy court:
The bidder would need to deposit $1 million with Rogoff attorney Cabot Christianson by 5 p.m. Sept. 8 to show intent to buy. These funds would be forfeited if the buyer fails to close within three business days of court approval.
If there are multiple bidders, and the high bidder fails to close within three business days, then the second high bidder must close within three days.
Bidding increments are required. The first bid above Binkleys $1 million must be $1.2 million or higher. Each increment thereafter would be $100,000.
By the close of business day Sept. 8, the Binkley Co., will bid the total of its $1 million loan advances and its expenses up to $100,000 as an offset bid.
Rogoff’s filing comes within days of the U.S. Trustee request that all of the assets not purchased by the new owners should be liquidated by a Chapter 7 official.
The motion by the U.S. Trustee to convert the case to a Chapter 7 bankruptcy after the sale is approved expresses concern that the people and businesses owed money won’t receive any compensation, said Attorney Kathryn Perkins, acting for the U.S. Trustee Office.
She makes the case that after the Sept. 11 sale closes, Rogoff “will face no reasonable likelihood of rehabilitation,” or legalese for restoring payments to those owed money.
Bankruptcy Judge Gary Spraker is expected to rule on the trustee’s motion to either allow the Chapter 11 to convert to a Chapter 7 or dismiss the bankruptcy outright at a Sept. 22 hearing.
As for other paths forward, Rogoff’s Sept. 5 filing sought to “spell out some of the assumption and expectations of the parties that were implicit in the asset purchase agreement that should be made explicit.”
GCI: Because GCI has “no interest whatsoever in the having the press remain at the Northway location for more than a few months,” Rogoff has personally guaranteed the cost of removal. Those costs are estimated to be about $1 million for dismantling the giant Goss offset press and all its accessories.
“It is possible that this Chapter 11 will convert to a Chapter 7 while Binkley is still using the presses, which means that, if Binkley does not take title to the press at closing,” it could go on the auction block, Rogoff’s attorney wrote.
Until the time it is moved, however, the motion makes a provision that the buyer can use the printing press free of charge until Dec. 31, 2018.
Arctic Boulevard warehouse: In 2016, having received an extension of her lease with GCI at the Northway Drive building where the paper is still printed, Rogoff began installation of an Urbanite printing press at 5900 Arctic Blvd. in order to have a press after vacating the GCI location.
“That construction was beset with problems. The installation of the press has not been completed and there is no path towards that press ever working,” the motion states.
The Binkleys have agreed to take this press as part of an amendment to the purchase agreement, but are also granted the right to turn it down before the sale closes, according to Rogoff’s Sept. 5 filing.
212 employees: After closing, the Binkley Co., or another buyer that casts the winning auction bid, can offer employees continued positions. But the offers, wages and other conditions will come from the new owners and the former arrangements with Rogoff would discontinue.
Severance pay will be issued to any of the 212 employees who don’t want to continue to work at the Dispatch, with scheduled paychecks for one through six weeks provided based on length of employment.
Rogoff is protecting Dispatch employees by requiring the buyer to continue to pay present salaries, health insurance and other benefits until they become as the new owner’s employees.
Unsecured creditors: For the lengthy list of about 180 people and businesses collectively owed more than $2.3 million from Rogoff, it may be good news to hear a U.S. Trustee is watching out for their interests.
However, Rogoff also claims herself as a creditor in her Aug. 28 filing, stating a debt of $8.2 million classified as “purchase money” that raises the total unsecured claims to $10.5 million.
Chapter 11 is filed in cases when a business intends to reorganize and keep operating as a plan is developed to repay creditors. A Chapter 7 bankruptcy calls for liquidation of assets with the proceeds distributed to creditors.
Under a deal struck between Rogoff and the Binkley Co., Rogoff is selling assets related to operating the ADN for $1 million. Judge Spraker is expected to approve the asset purchase agreement in a hearing set for Sept. 11.
If the sale goes to another buyer, these terms would still apply. Specifically, Ryan Binkley, his siblings and partner Jason Evans are only buying a portion of the corporation owned by Rogoff, as spelled out in filings so far.
According to her own financial filings on Aug. 28, Rogoff estimates $11.8 million worth of property assets. Of that, $4.7 million is estimated as the value on equipment that includes the printing presses.
This, and other assets that are not part of the sale, are the focus of the latest filings by the U.S. Trustee.
The unsecured creditors are an array of local and national businesses from ink and paper suppliers to electrical contractors.
“It is unclear who will take control as debtor-in-possession after the Sale Hearing,” Perkins wrote in her motion to U.S. Federal Bankruptcy Judge Gary Spraker.
“The United States Trustee presumes that Binkley’s manager (Jerry Grilly) will not remain in control of the debtor-in-possession after the sale, and it is unclear if Ms. Rogoff will step in to liquidate any remaining assets.”
The best-suited person to liquidate any remaining assets would be a Chapter 7 trustee, Perkins argued.
This has the benefit of bringing in another level of oversight. Chapter 7 trustees are private individuals, not government employees, who are appointed by the U.S. Trustee to administer Chapter 7 bankruptcy cases, said Jane Limprecht, the public information officer for the U.S. Trustees.
In filings with the court, the Binkley Co. wrote that it will decline to renew the nearly $40,000 per month lease on Arctic Boulevard and declined renewing the $47,700 monthly lease at the current offices on C Street. The purchase asset agreement is meant to leave the Binkley Co., “unencumbered” of Rogoff’s debts, according to filings.
“Rogoff… made it clear that (she) lacks the financial capability to immediately fund any activities beyond the sale hearing,” Perkins wrote. “Thus, absent an increase in the proposed purchase price sufficient to generate a return to the estate, the debtor will lack sufficient capital to fund the removal of any remaining equipment from the leased premises in order to liquidate it for the benefit of creditors.”
This inability to remove the Arctic Boulevard printing presses and other equipment, or in the case of Northway Drive landlord GCI’s inability to access that equipment until after Oct. 11 under the terms of the GCI stipulation, “diminishes the value of that equipment to the estate because inaccessible equipment would be substantially more difficult to market and liquidate for the benefit of creditors,” Perkins wrote.
But if a Chapter 7 is granted, the value of the unpurchased assets could at least be potentially preserved, she added.
“As a trained bankruptcy professional, that person would have bankruptcy knowledge to ensure maximum recovery for all creditors involved.”
A hearing is set for Sept. 22 before Spraker to consider Perkins’ motions. Her filings show there’s a legal choice to either convert the case to a Chapter 7 or to outright dismiss the bankruptcy.
But Perkins argues against dismissing outright the Chapter 11.
“If the case were dismissed, it would be unlikely that the creditors would see any recovery,” she wrote.
Naomi Klouda can be reached at [email protected].