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The family run company behind the 151-year-old newspaper The Reading Eagle has filed for Chapter 11 bankruptcy and is looking for a new buyer.
The bankruptcy filing in the Eastern District of Pennsylvania bankruptcy court is for Reading Eagle Company, which owns the daily Reading Eagle newspaper, an AM radio station, WEEU, a weekly paper and an expensive 10-year- old printing plant that helped sink it into debt.
The filing lists liabilities of $38.9 million and assets of $15.2 million.
The board that initiated the filing includes chairman and publisher William Flippin, his sister, retired actress Lucy Flippin, Reading Eagle Company CEO Peter Barbey, and board member William duPont.
All four board members are cousins descended from company founder Jesse Hawley, who started the paper in 1868.
The cousins are behind an entity, Black Walnuts Holdings, that bought the Village Voice in 2015 and shut it down in 2018.
The Barbey family, headed by Peter Barbey, is better known for its 20 percent stake in the lifestyle apparel maker VF Corp., which markets brands including North Face, Nautica, Timberland, Lee and Wrangler jeans.
Forbes listed the Barbey family’s net worth as $6.1 billion in 2015, making it one of the top 50 richest families in America before they dropped off the list in 2016. The Village Voice shut down in 2018 after a move to going all digital flopped.
Dirks, Van Essen Murray & April are handling a sale process for the Reading Eagle Co. “It will definitely be sold,” said company CEO Owen van Essen. “There is a fair amount of interest in it.”
The company hopes to sell to a new owner within 60 to 90 days and on Monday is expected to petition the bankruptcy court to set a minimum opening bid of only $5 million.
Among those trying to buy it to keep it alive and in local hands is company CFO Shawn P. Moliatu. “I am in the preliminary stages of putting together a group of community investors and bank financing that I hope will give us the opportunity to make a bid for the assets of the company,” Moliatu said in a written statement.
Douglas Arthur, at Huber Research, noted he likely won’t be alone, but it “would have to be at a very attractive price — maybe just the assumption of liabilities.
“Tribune Publishing could be looking because they have a paper nearby in Allentown.”
He did not think Gannett would seriously pursue as it might be too far from its New Jersey papers. MNG, which is stalking Gannett, “might have their hands full at the moment,” he said.
The newspaper company made a bad bet when it took on $25 million in debt to make a 77,000-square-foot expansion of its HQ and printing plant in 2009, just as the recession was clobbering print advertising — a slump from which it has not recovered.
Ad revenues dropped from $17 million in 2016 to $12.6 million in 2018, according to the Chapter 11 filing.
It defaulted on its loan with Sovereign Bank after which Barbey bought the debt from the successor company, Santander Bank, though his Black Walnut Holdings — the same entity that bought the Village Voice.
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