Creative Loafing's parent company, saddled with debt from new acquisitions and struggling amid the worst advertising recession in memory, filed for Chapter 11 bankruptcy protection Monday.
In addition to the Charlotte edition, which was launched in 1987, Creative Loafing Inc. publishes weekly free tabloids serving Atlanta, Tampa and Sarasota, Fla. It also publishes the alternative weeklies Chicago Reader and Washington City Paper, which were acquired in 2007.
Ben Eason, Creative Loafing's Tampa-based CEO, said the company had a debt load of more than $40 million and was facing a Wednesday deadline for an interest payment.
“The company owed more money than it can pay back right now,” he said in a statement. “This will give us a fresh start. It is a reorganization, not a liquidation. Everybody gets paid.”
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Advertising revenues in the last year have fallen up to 15 percent, the company said.
Under a Chapter 11 filing, a business usually continues to operate while a federal bankruptcy court oversees the reorganization of its debt and contractual obligations. Creative Loafing's case was assigned to federal bankruptcy judge Caryl Delano in Tampa.
Carolyn Butler, publisher of Charlotte's Creative Loafing, said the local edition will continue to publish during the reorganization. “We've kind of been left alone because we've done well in Charlotte,” she said.
Butler said Creative Loafing is trying to accelerate its presence on the Web. Company-wide, she said, Internet revenue has risen in the last year or so from $200,000 to about $1.2 million.
Earlier this month, another Charlotte alternative weekly, The Rhinoceros Times, quit publishing on newsprint and shifted entirely to the Internet.
In court documents, Creative Loafing estimated it had more than 50 creditors and liabilities in excess of $10 million.
Among the major creditors company-wide are AT&T, the IRS and the Florida Department of Revenue. Among the creditors listed for the Charlotte operation are Duke Energy, the N.C. Department of Revenue, and the N.C. Employment Security Commission.
No figure was given for what they were owed, but the company said Fayetteville Publishing Co. in Fayetteville, which prints most of the company's papers, was owed $39,292.
Creative Loafing recently trimmed its Charlotte circulation from 55,000 to about 50,000 to save money on newsprint and transportation.