Creditors still unpaid, court continues to probe Rogoff finances
Officials in the Alaska Dispatch News bankruptcy case probed further into former owner Alice Rogoff’s finances at a Nov. 2 bankruptcy hearing now on a search for other assets to turn into cash for creditors.
Progress on liquidating the assets not part of the $1 million sale of the ADN to the Binkley Co. has been slow due to the lack of assets to turn into cash, said attorney William Artus, who was hired to represent Nacole Jipping, the Chapter 7 trustee in charge of the liquidation.
“The bankruptcy case doesn’t have any money or assets to turn into cash to pay creditors, but we are exploring some new areas,” Artus said after the 30-minute hearing.
The hearing involved only questions between attorneys and Rogoff, as well as her former Chief Financial Officer Erin Austin.
Whether the new area moves into lifting the “corporate veil” infrequently allowed to remove the protection of a limited liability corporations remains to be seen, he added.
Another avenue, called the 2004 rule, will be pursued in December. That also allows a deeper look into Rogoff’s wealth and financial ledgers during her time as the owner of the company from April 2014 to September 2017.
“We’re looking at areas that could generate dollars. The trustee (court-appointed Jipping) will be working the case and there will be more,” he said.
Several steps moved the bankruptcy, declared on Aug. 12 by Rogoff, from the reorganization of Chapter 11 to the liquidation of Chapter 7.
According to Rogoff attorney Cabot Christianson, the Chapter 11 bills were paid. He filed a debtor’s final report to the court on Nov. 1 giving an account of payroll, insurance bills, rent for ADN properties, utilities and property taxes that amounted to more than $1 million paid by Sept. 22.
The money came from the Binkley loan-converted-to-purchase price of $1 million.
“Apart from professional fees that may be owed, there are no known unpaid claims that arose during the Chapter 11 phase of this case,” Christianson stated.
That still leaves most of the 190 original debts unpaid that were listed in the bankruptcy petition. The Municipality of Anchorage came off the list as $58,000 in property taxes was paid by Nov. 2, based on its senior lien and therefore priority to be paid.
Insurance for employee health and company liability also came off the list as priority payments.
No pending auction
No payments in the Chapter 7 phase have gone out to satisfy Rogoff’s more than $2 million in remaining unsecured debts owed to dozens of local contractors and unpaid vendors.
The Chapter 7 portion is a necessarily slow process, said Jipping, the Chapter 7 official handling liquidation. To date, no “proof of claim” request has been made of creditors to prove what is owed them, she said.
“First, we must determine on the assets to pay to creditors. Then we would send out a notice to them to file their claims of proof by a certain date,” Jipping said.
No auction has been scheduled to liquate whatever assets remain.
“We don’t have anything to auction off so we’re not planning on holding an auction,” Jipping said. “We’re looking into possible claims to assert which could bring money for creditors.”
The Binkleys were given first dibs on any of the Dispatch’s assets when the company purchased the newspaper.
They declined to take either of the large printing presses in order to pursue contract printing with Wick Newspapers, owner of the Mat-Su Valley Frontiersman in Palmer where the printing press is located.
Bankruptcy Judge Gary Spraker on Oct. 25 granted permission to abandon the Urbanite printing press located at 5900 Arctic Blvd., after the request to do so came from Jipping.
That takes another asset out of the possible property to be sold to pay debt, but Jipping had concluded that it would not supply income for the estate.
That printing press, purchased for about $2 million from J. Birket Inc. of Lebanon, Tenn., held outstanding debt of $161,044, according to the list of creditors supplied by Rogoff. Birket held a lien on the press, along with the warehouse owners, Arctic Partners.
The other printing press, a three-story Goss used since 1986 to print the Anchorage Daily News and later the Alaska Dispatch at 1001 Northway Dr., was shut down on Oct. 15. The building has been owned by GCI since 2014 and Rogoff was notified of eviction one day prior to her filing the bankruptcy petition.
So neither press, worth an estimated combined total of $2.5 million at the bankruptcy hearing in testimony by longtime pressman Ken Carter, were sold to help pay back the creditors.
At the Nov. 2 meeting of creditors — called a 341 hearing — Jibbing said she didn’t learn much new. At the hearing, attorney Artus questioned Rogoff and Austin about bank transactions and company names.
It circled back to known information from previous hearings: Rogoff paid more $4 million per year of her own money into newspaper operations from 2014-17, she said.
As money was needed to fill gaps between revenue and expense, Austin would request the additional funds, she said.
Ak Publishing Co. was merely the name of the financial company that paid the Alaska Dispatch bills, Austin said.
Other companies, such as the Moon and Stars Publishing Co. existed as the umbrella over websites Rogoff established, such as ArcticNow.com, NorthernLove.net and showmealaska.com. All of these continue to be active “to various degrees” but are not sources of income, Rogoff said at the hearing.
“We didn’t learn a lot from it (the hearing) really,” Jipping said. “Now we’re going to request a 2004 examination that will allow us to examine more. We will request it, and hold that in December. We should know more after that.”
A rule 2004 exam in a bankruptcy case involves a longer look-back at the company’s books. In this process, Rogoff must disclose debts, assets, income, expenses and financial transactions dating back as far as six years, though she had only owned the Dispatch since 2014.
“This is all in the research stage,” Jipping said. “We’re not looking at fraudulent actions.”
A key complaint by those owed money is that if Rogoff is a millionaire who owns a Cessna airplane, a distinctive home on Campbell Lake in Anchorage, and other properties on the East Coast with her billionaire husband, Carl Rubenstein, how can she claim she has no money to pay her bills?
“A lot of us want an answer to that question,” said Mark Miller, owner of M&M Wiring, which now shoulders a unpaid bill of $500,000 for contract work at the Arctic Boulevard warehouse. He’s not alone. Anchorage printing companies, retailers, national paper sources and even freelance writers are among the unpaid.
But a number of laws protect limited liability corporations, explained long-time Alaska bankruptcy attorney David Bundy, who is not an attorney involved in Rogoff’s bankruptcy but occasionally sits in on the hearings.
Corporations and limited liability companies, or LLCs, are both separate entities from their owners, Bundy said. A corporation and LLC will provide owners personal liability protection.
However, the “veil of limited liability” may be pierced in certain circumstances, causing the owner to be personally liable for the entity’s debts and judgments, he said.
“But there’s a whole legal process to make her produce it. The whole purpose of an LLC is to have a separate entity that the owners are not included in,” Bundy said. “The concept goes back a long way, to the Italians in the Middle Ages. You set up a company. Put money into it; people that deal with it are only dealing with a company and not you. Businesses couldn’t exist if this isn’t true.”
Bundy, who handled the historic airline Wien Air’s bankruptcy in the 1980s, the folding of the Anchorage Times in 1992 and other high profile cases, said sometimes one bankruptcy causes other bankruptcies in a community.
“I wouldn’t be surprised if that happens here. There’s only so much money to go around,” he said.
But if the corporate veil protecting Rogoff’s wealth were pierced, it would come in the form of an adversarial complaint filed to the federal bankruptcy court by the Chapter 7 official, said Erik LeRoy, who acts on behalf of the Binkley family.
Questions that begin to look at what is an Alice Rogoff loan with Northrim versus what was a company loan may be a look at making the distinction, he theorized.
A $10 million outstanding loan balance at Northrim Bank remaining from a $13 million personal loan Rogoff took out to purchase the Anchorage Daily News from the McClatchy Co. in 2014 may be just such an example.
LeRoy’s work on the Dispatch bankruptcy continues on because his client, the Binkley Co, continues to be called to testify.
“They hold the historical financial records for the company,” LeRoy said. “And in that role, they will continue to cooperate.”
Naomi Klouda can be reached at [email protected].