Extracting communications related to former Alaska Dispatch News owner Alice Rogoff's $13 million loan from Northrim Bank will take upward of 1,600 hours, the bank's attorney complained to the judge in the latest bankruptcy hearing Feb. 5.
At issue are Northrim loan documents that involved bank committee meetings and voluminous communications after Rogoff borrowed $13 million to help pay for the Anchorage Daily News.
In May 2014, she used the cash to go toward the $34 million payment to McClatchy News Co., and changed the newspaper's name to the Alaska Dispatch News. This past Sept. 11, she sold the newspaper to the Binkley Co. for $1 million as agreed in the Chapter 11 proceedings after she filed for bankruptcy protection on Aug. 12.
The Binkley Co. has since returned the newspaper to its original name.
Events moved quickly to rescue the financially distressed newspaper, but the court case, now converted from a Chapter 11 reorganization to a Chapter 7 liquidation, is limping at a slow pace as attorneys for Rogoff and now Northrim objected to handing over documents or paperwork that might contain confidential information.
Northrim attorney Michael Parise told U.S. Bankruptcy Court Judge Gary Spraker the request to produce that many documents and go to that much work and expense is "ridiculous" and an "obscene abuse of the (rule) 2004 exam."
The bankruptcy case is still in the process of discovering what assets and liabilities Rogoff claimed were her personal finances — through what's known as a rule 2004 exam — and which ones were pledged to Alaska Dispatch LLC.
The newspaper wasn't used as collateral for originally obtaining the Northrim loan, but the newspaper's revenue was used to make up to $70,000 per month in payments to Northrim, according to the public trustee, Nacole Jipping, through attorney Christine Tobin-Presser.
If Rogoff's personal loan obligation drained the Dispatch of revenue and contributed to its financial ruin, Jipping will be able to claim that money should go to the Dispatch's debts of $2.3 million to the scores of businesses and individuals left holding unpaid invoices.
Also at issue is a marital separation agreement, or MSA that the bankruptcy court has agreed is confidential. Rogoff was married for 34 years to billionaire David Rubenstein, founder of the global equity investment firm the Carlyle Group. They've been separated since 2005 and finalized their divorce this past December.
Loan documents contain information on money Rubenstein gave to Rogoff as part of their separation agreement. That dollar amount, like any mention of the divorce settlement money, is outside the scope of the case, according to Rogoff's attorneys. Rubenstein's attorney has also stepped in to point to "remedies" at his disposal if the MSA disclosure is broken.
Northrim's documents could get swept into the confidentiality arguments, though Spraker has said there's nothing inherently confidential about bank documents in a bankruptcy.
"To the extent the payment stream and loan communications talk about Alice Rogoff's financial affairs and MSA, the documents will need redaction," Parise said.
"If something needs to be redacted, the burden can't be placed on Northrim Bank" to do it, he said.
But Rogoff's attorney, James Lister of Birch Horton Bittner & Cherot, assured Parise at the hearing that he would review any of the documents ahead of the public trustee to protect confidentiality.
Both attorneys — Rogoff's and Jipping's — have signed stipulations agreeing to protect whatever may be confidential about Rogoff's income from her former husband. These will be under seal in court documents and not allowed to be known by the public. In public documents, the sensitive information will be redacted.
Spraker agreed to the arrangement of letting the bank's attorney run any information past Lister before it is forwarded to Jipping.
"You'll be the gatekeeper in this process," Spraker told Lister, who appeared telephonically from his Washington, D.C., office.
With that objection settled, Parise's grievances turned to the amount of work it will take to first access, then review communications between Rogoff and 25 or so loan officers. But his claims were met with skepticism.
Parise told Spraker some of the records that go back to May 2014 are now kept on archival tapes. Other loan forms, emails and letters from more recent communications may be on loan officers' desktop computers. Those could be produced by Feb. 11, Parise said.
It may be easy enough to get at information still on desktops, but the archival retrievals are arduous on a "small IT department," Parise said. Each hearing produces more information the bank is required to retrieve, he said.
Tobin-Presser, the attorney for the public trustee Jipping, expressed some frustration. The 2004 exam motion approved by the judge dates back to December. That motion spelled out documents relating to the Rogoff loan that needed to be reviewed.
Nevertheless, she consented to giving Parise more time to produce the archival paperwork "as long as he is committed to discussions" that move the bankruptcy examination forward.
She requested that Northrim's internet technician speak with IT people at her firm, Bush Kornfeld LLC of Seattle.
"None of us speak IT," Tobin-Presser said. "They will be able to see if they can do this and if it won't take 1,600 hours to do it."
Parise also said Northrim intends to seek reimbursement for the work to come from any funds that may be recovered to pay off Rogoff's debts.
The attorneys agreed to three hearing dates ahead to brief the judge on advancements in the case: Feb. 22, March 8 and March 15.