Investors Try to Force Floundering OC Register Parent into Receivership

Monday, November 10, 2014

Nine months ago, the owners of the Orange County Register were announcing an aggressive expansion into Los Angeles and not discouraging whispers that they may be eyeing the purchase of the rival Los Angeles Times.

That was then. This—layoffs, fights with creditors, the sale of its flagship building, the closure of its brand spanking new Los Angeles Register and a new attempt by investors to force it into receivership—is now.  

Last week, Abbey Financial LLC and Old Colony 2012 Investment Fund LLC asked the Delaware Chancery Court to put Freedom Communications’ operations under court supervision, arguing “it needs independent oversight because the company is insolvent and in financial distress from mismanagement,” according to Law360.

The two investors charged that Freedom was playing favorites by preparing to sell 14.3 acres of prime real estate near company headquarters for at least $45 million. That would benefit Silver Point Finance LLC, which holds the mortgage on all Freedom real properties. They accused Silver Point of having “undue influence” over the company.

That kind of talk has the whiff of an owner and creditors jockeying for position before bankruptcy, but Freedom denied in a statement that it was considering that option. The company said it was “pleased” the judge didn’t grant the motion to immediately toss them into receivership and that he would simply give it the usual consideration.  

Freedom sold its 173,000-square-foot headquarters in Santa Ana for $27 million in September, the same month it closed the Los Angeles Register. The Times, which reported the company owed creditors $24.7 million, was said to be among the more aggressive of those creditors. OC Weekly writer Gustavo Arellano called the Times an “angry bill collector” after it reportedly stopped delivering the Register’s newspapers for nonpayment of around $3 million.

Aaron Kushner, who is the primary owner with Eric Spitz, stepped down as publisher of the Register last month.

It’s been a raucous nine months, surprisingly outdoing the previous nine months during which Dallas-based A.H. Belo Corp. tentatively sold the Riverside Press-Enterprise to Freedom for $27.25 million in November 2013, then fought with the company for additional up-front financial guarantees amid rumors of Freedom financial problems.

The purchase’s completion was swiftly followed by layoffs at the Riverside paper and expansion in Los Angeles.

 –Ken Broder


To Learn More:

Two Freedom Shareholders Press for Receivership (by Mediha DiMartino, Orange County Business Journal)

How Interim Is Everything about the Orange County Register? (by Ken Doctor, NiemanLab)

Freedom Communications Calls Two Investors’ Receivership Claims “Meritless and Unfounded” (by Jordan Chariton, The Wrap)

Investors Ask Court to Put O.C. Register Parent in Receivership (by Tiffany Hsu, Andrew Khouri and Chris Kirkham, Los Angeles Times)

Los Angeles Register Stops the Presses Five Months after It Started (by Ken Broder, AllGov California)

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