US Judge Denies Credit Bid For Philly Newspapers

MARYCLAIRE DALE

PHILADELPHIA (AP) — Creditors trying to take over Philadelphia's two major newspapers at a bankruptcy auction next week must bid in cash, not with the millions owed them, a federal judge said Tuesday.

The decision overturns a bankruptcy court ruling that seemed likely to give The Philadelphia Inquirer and Philadelphia Daily News to creditors by year's end.

The newspapers had appealed in an effort to keep the company in local hands. They also argued that few others would consider bidding if creditors were holding $300 million in "house money" or "IOU's" with which to bid.

U.S. District Judge Eduardo Robreno agreed the newspapers do not have to allow credit bidding.

"This will encourage bidding," said lawyer Larry McMichael, who represents Philadelphia Newspapers and said a number of potential buyers have expressed interest. "How many of them will bid, I don't know."

The bankruptcy auction is scheduled for Nov. 18, with bids due two days earlier. However, McMichael expects creditors to seek a stay of the proceedings while they appeal the credit-bid issue.