News-Journal Corp. considers filing bankruptcy

Posted by Emily Dilling on April 17, 2009 at 5:32 AM

Under pressure from heavy debt, News-Journal Corp. recently hired a bankruptcy lawyer the news-journalonline.com reported Friday. Bruce A. Hanna, the company's attorney, said filing Chapter 11 "could potentially allow The News-Journal to continue operating, thereby saving several hundred jobs."

The strategy could help The News-Journal cut ties with Cox Enterprises, which owns 47.5 percent of the company, through debt reorganisation and lowering payments for Cox shares.

The decision to pursue the possibility of filing for bankruptcy was decided on when both the News-Journal and Cox were seeking ways to end their joint sales agreement. Should the News-Journal file Chapter 11, the companies would be required to have all major restructuring decisions approved by a bankruptcy court, news-journalonline.com reported.

The News-Journal and Cox have been in litigation since 2004, when Cox sued the News-Journal over a US$13 million investment that they weren't notified of. Since then, the company has been trying to sell the newspaper, but with no luck.

An attorney involved in the case commented, "there hardly seems a worse time to sell a newspaper than now."

News-Journal Corp. has already eliminated 186 jobs, as well as closed several offices in order to cut costs.