- The Washington Times - Tuesday, March 17, 2009

NEW YORK (AP) - A bankruptcy court judge said Tuesday that newspaper publisher Journal Register Co. can pay part of a $2.7 million newsprint bill that will allow it to keep printing.

U.S. Bankruptcy Judge Allan Gropper gave the owner of the New Haven Register in Connecticut and other newspapers permission to pay Canada-based Kruger Inc. and other vendors that the publisher considered critical to its operations.

A lawyer for Journal Register warned that the company would run out of newsprint within two weeks without the payment.

“If they fail to supply tomorrow, this company could be out of business,” Lawyer Shaunna Jones said of Kruger. “They are not willing to extend one dollar more to the debtor.”

Kruger representatives were not in court, and an e-mail message for comment Tuesday was not immediately returned.

In a hearing in New York on Tuesday, the judge also approved the appointment of Robert Conway as interim CEO, replacing James Hall. Conway was already slated to become chief restructuring officer.

The Yardley, Pa.-based newspaper owner filed for Chapter 11 protection from creditors on Feb. 21 with a reorganization plan that had been pre-negotiated with lenders. Its deal included the cancellation of its stock so it could become a private company controlled by its lenders.

The Journal Register will be back in court April 2 to ask for approval of its disclosure statement, which would begin the process for creditors to vote on its reorganization plan. Under the current timeframe proposed by lenders, the company could emerge from Chapter 11 as early as July 1, if enough creditors approve the plan.

A lawyer for a committee of creditors warned that the case was moving too fast.

“This case is on a hyper-aggressive timetable,” said Scott Hazan, of Otterbourg Steindler Houston & Rosen.

Hazan said serious problems lie ahead in the case, and that the creditors committee has “deep, deep concerns” about the timetable lenders want for the company’s bankruptcy exit.

But Dennis O’Donnell _ a lawyer for JPMorgan Chase, which is one of the company’s lenders _ said the plan had been negotiated for nearly a year, which explains the impatience and rush to emerge from court protection in just a few months.

Most large corporate bankruptcies are considered successful if they can exit bankruptcy within 18 months of filing.

The frozen credit markets pose a major obstacle because the company’s plan depends on its ability to obtain $25 million in loans to help it exit bankruptcy. Jones, a lawyer for the company, said it had not yet secured a commitment to get those loans.

Journal Register owns newspapers in Connecticut, Pennsylvania and other states. It already has sold two Connecticut dailies and closed several weeklies, including the Hershey (Pa.) Chronicle.

Also Tuesday, the judge signed off on the company’s requests to hire Wilkie Farr & Gallagher LLP as bankruptcy lawyers and Seyfarth Shaw LLP as special labor counsel.

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