The fate of Alaska's largest newspaper and news website will be decided in a U.S. Bankruptcy Court on Monday morning.
The stakes for Monday's hearing are high, according to attorneys for the seller and potential buyers: If a federal bankruptcy judge does not approve a sale of the Alaska Dispatch News to the Binkley family of Fairbanks over the objections of some creditors, the newspaper will no longer have a buyer.
Absent another buyer emerging Monday morning, the company could be forced to shut down within a week.
The Binkley family has put $1 million into operating the newspaper since it filed for Chapter 11 reorganization last month and doesn't want to delay taking ownership, said Erik LeRoy, an Anchorage attorney representing the ownership group.
"If we don't get the whole package done tomorrow I don't know what choice there is but the paper closes down," LeRoy said.
The company has been operating on an emergency loan from the Binkleys. That money would run out within "a week, if that," if the sale doesn't happen, said Cabot Christianson, the Anchorage bankruptcy attorney representing the ADN.
Christianson said he's confident the judge will approve a sale Monday, despite objections from several entities, including a group of creditors who say they stand little chance of recovering their money if the deal goes forward as is.
At Monday's hearing, current owner Alice Rogoff is expected to testify in person about efforts made before and during the bankruptcy to sell the newspaper.
"The primary issue at the hearing tomorrow is the sale of the newspaper and, 'Is this in the best interest of the estate? Is this the highest price that can be gotten?' " Christianson said.
Federal Bankruptcy Judge Gary Spraker is expected to rule on several objections to the sale at Monday's hearing, including filings from GCI and Arctic Partners LLC that question some terms of the proposed sale.
The broadest objections were filed by an "Unsecured Creditors Committee" that formed just last week. In a filing, the committee questioned the ADN's asking price.
"It appears that Binkley is paying an alarmingly low amount for the assets it is purchasing, which includes a sizable ongoing business — revenues of over $20 million per year," the filing on behalf of the creditors says.
Mike Mills, an attorney representing the group, said in an email the group is "hoping a competitive bidder shows up to create positive cash over the current $1 million deal."
But that doesn't look likely: A representative of a new group of potential buyers of the company traveled to Alaska to investigate the operation last week. But LeRoy and Christianson said the last they had heard, the group had decided not to bid.
Someone could always "walk into the courtroom with a briefcase of money and get everyone's attention" at Monday's hearing, said Christianson.
For the sale to happen, Judge Spraker would also need to find the Binkleys acted "in good faith" in their efforts to purchase the newspaper, said LeRoy.
Without a finding of "good faith," the door would be open for someone to appeal the sale in bankruptcy court weeks or months from now, potentially exposing the new owners to losing money invested in shoring up the newspaper's finances.
"The Binkleys are really trying to figure this out," LeRoy said. "They're looking for every way possible to print a newspaper."
Alaska Dispatch News LLC filed for Chapter 11 bankruptcy protection on Aug. 12. Rogoff, who had owned the online-only Alaska Dispatch, purchased the Anchorage Daily News and adn.com from the McClatchy chain in 2014 and the two organizations were combined into Alaska Dispatch News.
At the time of the purchase, Rogoff sold the Anchorage Daily News building on Northway Drive to the telecommunications company GCI. Alaska Dispatch News moved its offices but continued leasing space for presses and other production equipment. Rogoff made plans to print the newspaper in a warehouse on Arctic Boulevard, but the project was beset with complications and has never opened. In August, GCI sued to evict ADN from the Northway Drive building, and ADN filed for bankruptcy the next day. The company owes $2.5 million to a long list of vendors.
Attorneys say the Chapter 11 bankruptcy process is unpredictable.
Either the judge will decide to approve the sale over the objections of people owed money who may never be paid, or not approve it — which would all but assure the newspaper's failure.
"Bankruptcy judges have these unenviable choices they have to make," LeRoy said. "And this is a tough one."
Check adn.com for updates on Monday.