Brown files Chapter 11 bankruptcy

Thursday, May 6, 2010

News Staff Reports

Brown Media Holdings, Brown Publishing, the parent company of The Sunbury News and The Delaware Gazette and related subsidiaries, have filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of New York and have jointly agreed to sell substantially all of their assets pursuant to Section 363 of the bankruptcy code. Supported by the companies’ management, a ‘stalking horse’ bidder is in place to acquire the companies’ assets. As part of the transaction, a substantial portion of the pre-petition operating liabilities will be assumed by the purchaser.

The sale will involve all of the companies’ assets in Ohio, New York, Texas, South Carolina, Illinois, Iowa, Colorado, Utah, Arizona and Wyoming. The companies entering bankruptcy have sufficiently strong cash balances, positive operating cash flows and debtor in possession financing in place to finance the bankruptcy process.

“Today’s decision to sell was made to help assure that the businesses involved are best positioned to prosper in the years ahead,” Roy Brown, CEO of Brown Media Holdings stated. “Over the past two years, our employees have battled the effects of an unprecedented economic and financial crisis with inspirational grit and determination. While today’s decision is a difficult one for the Brown family and the companies’ shareholders, we would like to thank those employees for their dedicated efforts and our customers for their past and ongoing support. It is with their interests pre-eminently in mind that we have pursued this course.”

With the approval of secured lenders, the companies filed today for court approval of various, customary first-day motions, including $2.5 million of debtor in possession financing, use of cash collateral, the maintenance of employee payroll and health benefits and the continuation of the companies’ cash management systems, all to permit the companies to continue to operate in the normal course pending the sale. The companies anticipate their first-day motions will be approved in the next few days.

Brown Media Holdings and Brown Publishing Company operate various general and business news publications spread over 10 states. Since September of 2007, the companies have paid down more than $23 million of outstanding principal on their existing credit facility. During this time, the companies have continued to produce award-winning publications, developed and evolved new business models focused on the changing needs of its customers and maintained its long standing commitment to the communities they serve.