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Ben Eason, CEO of Creative Loafing Inc., wants to emerge from Chapter 11 bankruptcy still in possession of his small newspaper empire -- the Reader and five other weeklies. Atalaya, owed $31 million from Creative Loafing that it can't collect, wants the weeklies instead as collateral.
On Wednesday, closing arguments were submitted in writing in bankruptcy court in Tampa.
Atalaya: "It is undisputed that the Debtors' print advertising revenue and EBITDA [Earnings Before Interest, Taxes, Depreciation and Amortization] is substantially off from prior years. The Debtors' strategy for overcoming those losses is to change the business from a newspaper publisher with websites to an online business that also happens to publish newspapers. The critical flaw in that strategy is that online revenue, projected to be $1.2 million this fiscal year, comprises less than 5% of annual revenue."
Creative Loafing: "In everyday parlance, the term 'GIGO' is known to mean 'Garbage In, Garbage Out.' In other words, 'bad information begets bad conclusions. With all due respect to [Stamos Nicholas, the Atalaya valuation expert], his opinion of the Debtors' value in this case is simply wrong due to GIGO. For some unknown (but easily inferred) reason, Mr. Nicholas either was not given the relevant and available information about the Debtors, or chose to disregard that information."
Bankruptcy judge Caryl Delano has said she'll make her call in a few days, probably early next week, in a conference call.