Sun-Times' Parent Company Files For Bankruptcy

By Marcus Gilmer in News on Mar 31, 2009 2:20PM

The Sun-Times Media Group, owners of the Chicago Sun-Times and 58 suburban papers (and their corresponding websites), filed for Chapter 11 bankruptcy protection today, "with the aim of reorganizing operations, settling a tax liability and making the company fit for a buyer." According to Crain's, the STMG is the fifth newspaper publisher in the last few months to file for protection from creditors, joining the ranks of the Tribune Company. (Read the STMG press release here)

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.

Halbreich also said, "Unfortunately, the deteriorating economic climate, coupled with a significant pending IRS tax liability dating back to previous management, has led us to today's difficult action." The company currently owes upward of $608 million in backtaxes and penalties thanks to the now-imprisoned former head of the company, Conrad Black. The Sun-Times MG is quick to point out a difference between their filing and those of others, such as the Trib Co.: the STMG has no bank debt unlike those others, but the debt with the IRS prevented the company from raising new capital. Crain's reports the STMG listed $479 million in assets and $801 million in debt. The company has retained Rothschild Inc., who assisted United Airlines with their bankruptcy filing, to help with a possible sale of assets.

The Sun-Times Media Group website has a plethora of information about the Chapter 11 filing. Halbreich, whose letter to Sun-Times readers can be read here, put an optimistic spin on things, saying he expects the bankruptcy issue to be resolved by the end of the year. As for the Sun-Times crew themselves? Well, they seem pretty calm about the whole thing.