Judge orders Northrim to turn over Rogoff’s loan documents to trustee

After months of cross filings arguing whether former Alaska Dispatch News owner Alice Rogoff must reveal documents related to a $13 million bank loan, a bankruptcy judge decided it's all fair game except for her marital settlement agreement.

The bottom line of Bankruptcy Judge Gary Spraker's March 21 decision is that Rogoff's finances are not confidential as it relates to the $13 million loan from Northrim Bank used to purchase the Anchorage Daily News from McClatchy Co.

Spraker ordered Northrim to turn over all documents to the public trustee Nacole Jipping in an unredacted form, including memos relating to Rogoff's personal finances.

Rogoff filed for Chapter 11 bankruptcy protection on Aug. 12 after the newspaper she had owned from 2014 to 2017 fell into financial distress totaling millions in losses per year and had been sued for eviction by GCI the day before.

She sold the company to the Binkley family Sept. 11 for $1 million, and the name was eventually changed back to the Anchorage Daily News.

(The Binkley Co. has since purchased the Alaska Journal of Commerce in a sale that was announced Feb. 23.)

Now, months later, the Chapter 11 reorganization has been changed to a Chapter 7 liquidation, which means the public trustee continues to analyze finances through what's known as a Rule 2004 examination. This looks at Rogoff's conduct and spending habits through financial documents that may affect how the news operation became distressed.

One of those ways is that the newspaper's revenues were used to pay interest payments on a personal loan Rogoff secured in order to purchase the Anchorage Daily News operation and headquarters building housing its printing press for $34 million, according to court filings on questions Jipping is pursuing.

The effort seeks to recoup as much as possible of the $2.7 million in unsecured debt owed to dozens of contractors and individuals, Jipping has said.

Even though the trustee agreed to keep bank information confidential — not available through public court records — Rogoff nonetheless objected in several rounds of court filings. Another objection was that she could be vulnerable to identity theft if her finances were revealed in publicly available documents.

But Jipping, through attorney Christine Tobin-Presser, argued the relevancy is that Rogoff took out a personal $13 million Northrim loan to acquire the Anchorage Daily News in May 2014. Then, beginning in June 2014, Rogoff "transferred over $2 million in monthly interest payments to the Northrim Bank on the Northrim Rogoff loan," Tobin-Presser argued in her filings.

"The Debtor (the Alaska Dispatch News) did not become obligated on the Northrim Rogoff loan until March 2017… The Trustee is entitled to review the Northrim Rogoff Loan Documents for information, including as to Ms. Rogoff's financial wherewithal to ascertain why these withdrawals were made from the Debtor's operating funds rather than by Ms. Rogoff," Tobin-Presser wrote.

Rogoff has argued that she injected more than $16 million of her own money from 2014 to 2017 into Alaska Dispatch operations to keep the newspaper afloat, and even that she is the largest creditor owed money in the bankruptcy.

But Tobin-Presser countered that "the fact that Ms. Rogoff provided significant and necessary cash to fund the undercapitalized Debtor's operations does not negate the need for the inquiry."

The fact remains that Rogoff "opted to treat her own contributions to the Debtor as loans that the Debtor (the ADN) would be required to repay in full, plus six percent interest."

Tobin-Presser said Rogoff's marital settlement agreement isn't the sticking point. Her divorce was finalized Dec. 8, with billionaire husband and Carlyle Group founder David Rubenstein. The couple held extensive property and other assets. The issue is how money was spent on her Alaska obligations.

"Northrim Bank is required to turn over all documents to the Trustee in unredacted form, including documents relating to Ms. Rogoff's personal finances," Tobin-Presser wrote in an email to the Journal. "Thereafter, a document relating to Ms. Rogoff's financial condition is only subject to protective treatment if it does not relate to the 'acts, conduct or property or to the liabilities and financial condition of the debtor, or to a matter which may affect the administration of the debtor's estate.'

"Whether a document falls outside of that broad scope is something that would be determined after the Trustee has had an opportunity to review the documents."

When Rogoff obtained a loan from Northrim in 2014 to help purchase the Anchorage Daily News, she submitted personal financial statements and at least one tax return, according to the filings. Communications between Rogoff and Northrim relating to her personal assets also are part of the loan record.

Jipping is seeking to review these loan documents. But Rogoff argues the records are hands-off because they "constitute impermissible pre-judgment discovery of a co-debtor," which would be Rogoff. The relevant "debtor" in the bankruptcy is the Alaska Dispatch News, as defined for legal purposes by the nature of limited liability companies.

In her objections to allowing Jipping to be privy to certain bank documents, Rogoff claimed she is "a business owner and has complex business financial affairs such that her financial situation (particularly net worth and liquidity) is itself sensitive commercial information."

A Rule 2004 isn't without limits, the judge wrote in ruling. Once there is an objection to a Rule 2004 examination, the person requesting the information — in this case Jipping — has the burden of showing good cause, he wrote.

Both parties recognize the trustee's investigation of "avoidance claims for monies" paid in Alaska Dispatch News revenues, Spraker wrote, referring to the money that possibly was not properly paid out of Dispatch revenues. "The parties agree that the debtor was not a party to the loan, nor was it originally a guarantor of the original loan."

The court isn't going to get involved in "a discussion of potential defenses to potential claims," however, Spraker wrote. "The salient point for the limited matter before the court, however, is that Rogoff's proffered defense relies upon her financial ability to make those loans. In essence, Rogoff's argument calls into question her financial ability."

Spraker said how Northrim expected to be repaid is a legitimate area of inquiry.

"Northrim originally did not expect repayment from the debtor (the Alaska Dispatch) as it was neither the borrower, nor the guarantor. Yet, to forestall adverse actions against Rogoff for failure to pay on her loan, the debtor assumed liability and pledged its assets to Northrim," Spraker wrote, referring to Rogoff offering the newspaper as collateral for the remaining $10 million owed as she renegotiated the loan in the months before filing for bankruptcy.

In an April 2 filing, Rogoff scaled back her objections. She and her attorney, James Lister of Birch Horton Bittner & Cherot of Washington, D.C., said they had time to look through 7,000 pages of Northrim correspondence, much of it duplications. She now asks that only the talking points that address her "liquid assets" and statements of "net worth" be redacted from public view.

The deadline for those seeking to recoup money owed in a Proof of Claim to the bankruptcy court was March 19. This included all contractors, businesses and individuals on the original list of creditors made by Rogoff of her debts.

A final listing of all debt has not yet been made available by the trustee.

Naomi Klouda can be reached at naomi.klouda@alaskajournal.com.