In a move that shocked everyone involved, a U.S. Bankruptcy Court judge rejected both of the competing restructuring plans of the publisher of the Baltimore Jewish Times and its former printer.
Judge James F. Schneider was harshly critical of the increasingly bitter and personal litigation between Alter Communications owner Andrew Alter Buerger and the owners of the company’s largest creditor, H.G. Roebuck and Sons Inc. — calling it a “death struggle” that he could not allow to continue.
“Both sides have been unreasonable and lots of bad ideas on both sides have brought us here,” Schneider said Thursday after concluding three days of hearings.
Schneider ordered the parties to come back in 30 days with a joint agreement on how to best compensate Alter’s creditors and move the company forward out of Chapter 11.
If no consensus can be reached in 30 days, the judge said, he would appoint an independent Chapter 11 trustee.
H.G. Roebuck President Charles M. Roebuck III and Vice President Richard M. Roebuck left the courtroom saying only that they were “surprised” by Schneider’s decision — a sentiment echoed by lawyers on both sides.
The bankruptcy hearing that ended Thursday had begun two days earlier, but was at least two years in the making.
It started when Alter stopped paying under its contract with H.G. Roebuck — its printer for 50 years — after the Roebucks refused Buerger’s request to renegotiate the contract.
H.G. Roebuck then sued Alter, and later Buerger. It won a $362,000 judgment against the publisher.
Alter filed for bankruptcy protection in April 2010 and eventually put forth a restructuring plan that would give 85 percent of its profits over the next five years to its creditors. Schneider approved that plan in December, but H.G. Roebuck appealed on the ground that the plan did not fairly compensate them.
On appeal, U.S. District Court Judge Richard D. Bennett ruled that the matter should be sent back to Schneider and H.G. Roebuck be allowed to present a competing plan.
Alter presented essentially the same plan this week, but this time Schneider refused to confirm it.
“I was reversed on that [by Bennett], so I’ve taken that to heart,” he said.
Alter’s attorney, Maria Ellena Chavez-Ruark of Tydings & Rosenberg LLP, said after Thursday’s hearing that her interpretation of Bennett’s decision was not that it was a repudiation of the Alter plan, but rather an order that H.G. Roebuck be allowed to present its own plan for consideration.
In July, H.G. Roebuck offered a plan to take at least a 75 percent stock ownership of Alter. Buerger’s camp quickly rejected it on the grounds that it would leave the Roebucks, who are not Jewish and have no publishing experience, in charge of a Jewish publication.
Four days before this week’s hearing began, H.G. Roebuck revised its plan to offer the possibility of a 50-50 split of the company, with Buerger staying on as publisher of the Jewish Times and a nine-member board of advisors breaking any deadlocks on business decisions.
Schneider rejected that plan on Thursday, saying it was fraught with “time bombs and traps.”
Buerger had made it clear he would not stay on as publisher under that arrangement and several key Jewish Times employees had testified they would leave with him.
As an alternative publisher, the Roebucks suggested current Jewish Times editor Neil Rubin, who said he was not interested. Then they said they were in talks with Washington Jewish Weekly publisher Craig Burke.
“Roebuck’s presentation of the future management [of the Jewish Times] is so vague, it would likely lead to liquidation,” Schneider said.
That, he said, was the main thing he was trying to avoid in making his decision, his goal being to “preserve the Baltimore Jewish Times as an institution vital to this community.”
To that end, he suggested the two sides stop litigating and start negotiating.
“Is this the example we set for our children in how we deal with each other?” he asked. “How we treat each other?”
Schneider suggested a plan that would settle H.G. Roebuck’s debt at a flat rate rather than a percentage of profits or stock. Failing agreement on a flat rate, he said, Roebuck should probably be awarded some stock, but “not anything close to a majority interest.”
Buerger said he was disappointed Alter’s plan was not confirmed, but glad that H.G. Roebuck would not be taking over the company and he was grateful to the employees and community members who stood behind him and his family.
“I’ve been getting emails for the last 24 hours saying ‘We support you,’ and advertisers saying, ‘We’re going to pull out if there’s a hostile takeover,’ ” Buerger said. “Tremendous support. I’ve gotten choked up.”
H.G. Roebuck attorney William L. Hallam of Rosenberg|Martin|Greenberg LLP said he expected Schneider to confirm one of the plans going into the hearing, but the judge had provided “valuable input” to help the upcoming negotiation process.
“Everybody’s motivated now,” Hallam’s partner, Kevin J. Pascale, said.