With no clear-cut consensus on how to bring it out of bankruptcy just yet, Alter Communications Inc., publisher of the Baltimore Jewish Times, did get court approval Tuesday for an emergency loan of $100,000 to meet payroll and pay crucial vendors.
U.S. Bankruptcy Court Judge Nancy V. Alquist approved the terms of a bridge loan from personal funds of Alter President and majority shareholder Ronnie Buerger. The terms of the loan call for Buerger, the mother of CEO Andrew Buerger, to hold a “superpriority administrative claim,” which would put her ahead of most creditors if the company is liquidated.
Most of the $100,000 loan will go to cover employees’ back pay and operational costs such as postage for mailing the papers and phone and Internet service.
Alquist initially denied a request to give superpriority status to $16,000 of the loan that was earmarked for Alter’s law firm, Tydings and Rosenberg LLP, after an objection from Alter’s landlord.
G. David Dean, with Cole, Schotz, Meisel, Forman & Leonard P.A., represents landlord 901 LLC. Dean argued that his client would not be paid out of the emergency loan, and the company would then be pushed back further in terms of priority if Alter were to liquidate.
“It’s moving forward on the assumption that ‘nothing bad will happen if we stiff the landlord,’” Dean said.
Later, though, Dean and Alter’s attorney, Alan M. Grochal, agreed that the law firm and the landlord would split the $16,000. Alquist then altered her ruling to allow the full $100,000 to be considered as a superpriority in deference to that agreement — one of few in the lengthy litigation.
Alter filed for Chapter 11 bankruptcy protection as part of a bitter, two-year-long dispute with its former printer, H.G. Roebuck & Son Inc.
The emergency loan will be used to pay the paper’s current printer, as well as a freelance editor’s back wages and salaries and commissions to managers and salespeople who were not paid in the last pay period.
Andrew Buerger testified that paying staff was crucial to keep the paper a going concern.
“Commissioned salespeople will tend to leave pretty quickly if they’re not paid what they earn,” he said.
However, Andrew Buerger will also be paid for two missed pay periods. Dean questioned the priority of paying Buerger’s salary and asked him if he would leave the company if he did not receive the $6,800 in unpaid wages.
Clearly choked up, Buerger took a long pause as he mulled over his answer. With the courtroom silent waiting on his answer, Buerger said without pay he would have no choice, for his family’s sake, but to seek employment elsewhere.
“With all due respect, I have a wife with multiple sclerosis and we’ve adopted two children recently, and I’ve been putting up all of my money to keep this company running,” he answered. “If this company shuts its doors, I’m unemployed with no insurance, a sick wife, two kids, they’d take my house and I’d have nothing in the bank. I don’t think it’s unreasonable to collect my paycheck for the work I’ve done.”
Following her son’s emotional testimony, Ronnie Buerger stopped and gave him a hug before taking the stand herself.
When Dean questioned whether she would loan the money without superpriority status, Ronnie Buerger alluded to the fact that she has a fixed income.
“I have to think very hard about how I spend the money,” she said.
In addition to the Jewish Times, Alter publishes Style magazine, Chesapeake Life magazine and a portfolio of custom publications. The Jewish Times, Maryland’s largest Jewish weekly publication, publishes on Fridays, averages more than 120 pages and has a paid circulation of nearly 50,000, according to its website.
The paper was founded in 1919 by David Alter, and Andrew Buerger took over the company when his father, Charles A. Buerger, died in 1996. Andrew Buerger changed the company name from Jewish Times Inc. to Alter Communications.
The bankruptcy was triggered after Roebuck sued Alter and Andrew Buerger for breach of contract in 2009 and won a $362,000 judgment.
Looming over Tuesday’s hearing was the larger issue of hammering out a reorganization plan that all parties could sign off on. A total of three plans have been proffered over the last two years; H.G. Roebuck put forth the latest version on Feb. 12, which was amended on Feb. 22.
Under that plan, a new management team would be put in place that does not include the Buerger family. The officers and directors include principals from Roebuck. The proposed new publisher would come from the WJW Group LLC, the Rockville-based publisher of the Washington Jewish Week newspaper.
Alter’s plan, submitted at the end of 2011, would shift most of the ownership to a new group of investors led by businessman Dr. Scott Rifkin.
Rifkin, founder of Mid-Atlantic Health Care LLC, would share an 80 percent stake in Alter with and the rest of the unnamed investors in exchange for a capital infusion of $600,000.
Hearings on a joint reorganization plan are scheduled to continue Wednesday.
Neither side offered much hope for an immediate solution. Asked after the hearing about the likelihood of having a plan in place by the end of the month, Roebuck attorneys William L. Hallam and Kevin J. Pascale, both with Rosenberg|Martin|Greenberg LLP in Baltimore, declined to comment.
Alter’s lawyer, though, was cautiously optimistic.
“We’re looking at this business week-to-week until we can get a consensual plan in place,” Grochal said.