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This just in… Sun-Times files for bankruptcy

Tuesday, Mar 31, 2009

* 7:57 am - Sad news, but not unexpected, I suppose…

Sun-Times Media Group Inc., owner of the Chicago Sun-Times and many suburban newspapers, today voluntarily filed for Chapter 11 bankruptcy protection with the aim of reorganizing operations, settling a tax liability and making the company fit for a buyer.

The petition was filed with the U.S. Bankruptcy Court in Delaware. Chairman Jeremy Halbreich said the filing was a difficult decision but essential for the company “to re-establish itself as a self-sustaining, profitable operation. That is worth fighting for.”

His overriding goals are to sustain the company’s print and online news operations while “preserving as many jobs as possible,” he said.

The company has one significant creditor — the Internal Revenue Service. The IRS has said Sun-Times Media Group owes up to $608 million in back taxes and penalties from past business practices by its former controlling owner, Conrad Black, now imprisoned for theft from corporate coffers.

Unlike other newspaper owners that have filed for bankruptcy amid steep dropoffs in advertising, including Chicago-based Tribune Co., Sun-Times Media Group has no bank debt. But its IRS debt thwarted efforts to raise new capital.

Halbreich said Sun-Times will continue talks with the IRS while implementing a “strong and impressive” business plan. It also will pursue a deal with buyers and has hired Rothschild Inc., which was involved in the bankruptcy of United Airlines’ owner, to field offers.

Several potential buyers have approached Halbreich since he took over Feb. 10 as chairman and interim chief executive, he said. “We’re very confident that there’s going to be some interest here,” he said. “We intend to start that process immediately.”

The company claims it has “sufficient financial resources” to continue its day-to-day operations.

* Sun-Times Media Group CEO’s letter to readers

To Our Valued Readers:

Today our corporate parent, Sun-Times Media Group, Inc. and certain of its affiliates voluntarily filed for Chapter 11 bankruptcy protection. This action begins a legal and financial process that is designed to protect our Company’s brands, stabilize our business and create a brighter future for all of our stakeholders, including our news organizations, advertisers, employees, and you our valued readers.

Please be assured that this action does NOT mean the Company or our newspapers or online sites are going out of business. We will continue to publish and operate our newspapers and corresponding online sites, including the Chicago Sun-Times, the SouthtownStar, Beacon News (Aurora), Courier-News (Elgin), Herald News (Joliet), Lake County News-Sun (Waukegan), Naperville Sun, and Post-Tribune (Merrillville, Ind.); our weeklies published by Pioneer Press and Fox Valley Publications; our free shoppers and content on corresponding online sites, including YourSeason.com and Rogerebert.com.

If you are a subscriber to any of our publications, your newspaper will continue to be delivered as it is today, and you will still get the great mix of news, sports, features and opinion that you count on in each edition. Like many U.S. companies today and like many other newspaper companies across the country, Sun-Times Media Group has faced significant declines in revenue. This process will help us to better address these challenges and ultimately work toward strengthening our commitment to remaining the Chicago area’s best, most reliable and most distinguished source of news and information for our readers.

Sun-Times Media Group intends to move through the Chapter 11 process as quickly as possible, and expects that the process will be completed in 2009.

In the coming weeks, we will be keeping you informed through our Web site thesuntimesgroup.com. If you have further questions, please do not hesitate to contact us.

I would like to thank you for your business and support during these challenging times.

Sincerely,

Jeremy L. Halbreich

Chairman of the Board
Interim Chief Executive Officer

- Posted by Rich Miller        


18 Comments
  1. - Ghost - Tuesday, Mar 31, 09 @ 8:09 am:

    The IRS should just wiave this money; Why drive all hese people out of work during a recession over the past practices of a jailed corrupt owner.

    Rich, time to buy the Times :)


  2. - anon50 - Tuesday, Mar 31, 09 @ 8:10 am:

    If American citizens were operating the way these corporations are nowadays, everything but the clothes on a person’s back would be seized by the IRS. It is absolutely unbelievable that the board of directors for the Sun-Times didn’t know that Conrad Black was operating this way. You get to the point you get tired of making excuses and forgiving these people. Then needs to be some stiff penalties, like serious jail time, for other executives besides Mr. Black because you can’t tell me they didn’t know about this. Where was the Sun-Times CFO?

    The IRS nor the federal government can expect everyday citizens to continue to abide by the law, if corporations keep getting a pass. The little people can’t keep bearing the burden in America; it’s time for some real reform and change. It’s just unbelievable, unbelievable!


  3. - Leroy - Tuesday, Mar 31, 09 @ 8:13 am:

    Ghost - Why should a single working mother of two, living just above the poverty line, have to subsidize corporate theft by having the IRS waive owed taxes by the Sun-Times Media Group?

    Do we have to bail EVERYONE out?


  4. - Six Degrees of Separation - Tuesday, Mar 31, 09 @ 8:25 am:

    Do we have to bail EVERYONE out?

    Yes, and have the gub’mint own it. Fire Jeremy L. Halbreich, but not before he collects a $20 million bonus.


  5. - Ghost - Tuesday, Mar 31, 09 @ 8:41 am:

    Leroy, a single working mother of two just above the poverty line pays no taxes and gets money back from the government. So she is being subsidized.

    How is waiveing tax debt a subsidy? What about the 40 single moms wth kids who depend on the sun times for their livielihood who will be unemployed, or the hundred of families who need those jobs in order to feed and lcoth themselves.

    The country is in a recession, should the governemnt be driving a viable buisness out while trying to prop up failed business?


  6. - Redbright - Tuesday, Mar 31, 09 @ 8:43 am:

    What is the IRS’s ability to negotiate long-term payments? I think they (and every other person/organization) should pay their full taxes but the bankruptcy process should allow for very long term payments of large amounts.

    It would be better for the US for the CST to pay off their debt (plus inflation) over 50-100 years than to pay a significantly lower amount now. It may well be that the IRS does not have the legal tools to do this without legislative or regulatory action.


  7. - VanillaMan - Tuesday, Mar 31, 09 @ 8:49 am:

    I don’t know if Tim Geitner would understand how challenging it is to pay back taxes.


  8. - lake county democrat - Tuesday, Mar 31, 09 @ 8:53 am:

    Not to be too cynical, but it’s probably a good thing for the Sun-Times (which I think is a great paper, I subscribe to, and wish nothing but the best) that it’s now liberal and not the neocon voice it was under Conrad Black. If nothing else, it can’t hurt!


  9. - Rich Miller - Tuesday, Mar 31, 09 @ 8:56 am:

    Lord Black was the worst thing to ever happen to the Sun-Times. Even The Alien was far better than him. At least Murdoch didn’t rob the paper blind.

    I agree that the former board of directors should have some culpability here. The problem is that the paper has new leadership, a bolder, more honest business approach, a leaner, meaner staff, but as long as they have this IRS debt over their heads they’ll never be able to move forward. Black should pay it.


  10. - Justice - Tuesday, Mar 31, 09 @ 9:04 am:

    Perhaps the people at GM and Chrysler should take a cue from The Sun Times and file for Chapter 11. It’s a shame that the Sun Times biggest creditor is the government. Something is seriously skewed here. The feds prop up companies who couldn’t possibly succeed and let those who could succeed, fail.


  11. - Plutocrat03 - Tuesday, Mar 31, 09 @ 9:13 am:

    It is sad to see such an institution encounter bad times. It is worse for the people who have worked to make the paper what it is today be given the boot as thanks for all their hard work. The reality is that the organization is suffering from financial crimes committed by their leadership.

    It is incomprehensible to me that more people did not know about the looting of the paper by Lord Black and his cohorts. Certainly their Board of Directors had to know what was going on. There should be more scrutiny of their behavior and a restitution of the money they took while they allowed the assets of their company to be plundered.


  12. - Concerned Observer - Tuesday, Mar 31, 09 @ 9:14 am:

    Black should pay it, Rich is right.

    But, since that’s unlikely, I’d like to see the IRS negotiate it down to some workable number. That $680M is gone, and not coming back.

    Make it $300M, set up a payment plan, and hold them to it. If they don’t meet their requirements, THEN you worry about closing them down.


  13. - MrJM - Tuesday, Mar 31, 09 @ 9:23 am:

    Con Black’s malfeasance is just the type of behavior that should lead the IRS to “pierce the corporate veil” and go after Lord and Lady Black’s personal assets to settle the newspaper’s debt.

    It might not save the S-T, but it would be nice to see it ruin the Blacks.

    – MrJM


  14. - Chicago Guy - Tuesday, Mar 31, 09 @ 9:25 am:

    The judge who let “Lord” Black off so lightly ought to be impeached. Black destroyed the livelihoods of thousands of people and will have taken away the leading investigative journal in the nation’s second most important city. He got a slap on the wrist compared to the damage he did.


  15. - Third Generation Chicago Native - Tuesday, Mar 31, 09 @ 9:26 am:

    So sorry Rich. Yes, Lord Black should pay for it, but how hard would be to find all the hidden funds he took?
    This affects so many jobs, from delivery, to printing, to of course all the writers,and other staff. Not to mention all the suppliers/vendors of ink, paper, service for equipment & vehicles, vehicles, insurers, etc. The Suntimes Media group is something like 59 local news publications in Chicagoland alone? This is horrific.


  16. - Bobs yer - Tuesday, Mar 31, 09 @ 11:12 am:

    US Gov will able to drive the reorganization. Fact of no bank debt is huge. EBDIT is probably fine, which means they are a viable candidate for reorganization.

    I’ve always been a trib guy (at least until Zell wrecked it and took it BK), but no denying CST has been in the lead in investigative reporting for the last 10 years (see: e.g. Hired Truck). We need to keep those reporters working. And the feds need to start tracking and recovering the money that was squeezed out. Black et al didn’t burn it…it’s in real estate and business investments around the world.


  17. - wordslinger - Tuesday, Mar 31, 09 @ 7:45 pm:

    I suspect the former audit committee chair, Big Jim, is unavailable for comment.


  18. - stiffedbySunTimes - Monday, Apr 20, 09 @ 10:14 am:

    How many other subscribers have been stiffed by this corporation? They stopped publishing my local paper and offered me a refund on my subscription. When I deposited the check it was refused and I lost that money and was charged a $19 returned check fee by my bank. I have called them once a week for four weeks, got voicemail, left messages and no response. No wonder they are in trouble.


Sorry, comments for this post are now closed.


* They really make this too easy...
* Crain's: "Market-based" solution is rigged
* Even more problems for Schock
* Yesterday's blog posts

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