The bitterly-divided owners of the Philadelphia Inquirer, Daily News and Philly.com are now considering auctioning the company off to the existing investors and possibly third parties, according to recent court filings.
Interstate General Media, the partnership of six investors that bought the company in March of 2012, has been effectively paralyzed for months now.
Its current management structure requires the agreement of two of its most prominent members, South Jersey businessman George Norcross and former New Jersey Nets owner Lewis Katz, for major decisions. But Norcross and Katz have been at odds over many issues, and have been in a court since October over the on-again-off-again firing of Inquirer editor Bill Marimow.
Philadelphia Common Please Judge Patricia McInerney ordered Marimow returned to his job last month, but that decision is under appeal.
In a filing in Delaware Friday, Norcross asks the state court to dissolve the company and order a private auction among the current owners of the partnership. “There is no mechanism in the [partnership] agreement to break the deadlock,” the filing states.
Norcross filed in Delaware because that’s where the partnership is registered. In the court fight over Marimow, Norcross wanted the matter heard in Delaware, while Katz argued it should be in Philadelphia, where the business actually operates. The Philadelphia judge agreed, and took the case.
Pre-Christmas talks fail
In a press release accompanying the filing, Norcross and his allied owners said they went to court in response to a “surprise filing” by Katz in Philadelphia Common Pleas court seeking a public auction of the company.
“A public auction would be open to third-party bidders, including hedge funds and others who may not want to keep all three outlets open,” the Norcross press release said.
Katz’s attorney Richard Sprague acknowledged in a statement released Friday evening that Katz and the company chairman, philanthropist H.F. “Gerry” Lenfest, had sought an auction of the company.
“Mr. Katz and Mr. Lenfest are interested in securing the highest value for the company,” the statement said. “The public auction allows for the Katz/Lenfest party to re-bid for the company, which they are committed to doing, along with any other qualified third-party, including Norcross.”
Sprague did not provide a copy of his filing, which was not immediately available on the electronic docket of the case.
The Norcross filing in Delaware says that Lenfest, as chairman of the company, called a special board meeting last month to consider several critical management issues. In the event the owners couldn’t agree, the filing says, Lenfest wanted the owners to consider retaining an “independent third party to conduct a public auction to sell IGM in which IGM’s members would be invited to bid along with any interested third parties.”
According to the filing, the parties agreed to “go off the record to discuss whether a settlement could be reached” prior to the Dec. 18 meeting, and the meeting “was never resumed.”