McClatchy secures financing

McClatchy Co. won a series of court decisions in a hearing Wednesday that cleared the way for shortterm financing and kept alive the news organization’s hope for a fast exit from bankruptcy.

But the hearing also sharpened the focus on an investigation into transactions between the media company and its largest creditor, as a key government attorney warned that the case likely hinges on the results.

Forced into a telephonic hearing by the coronavirus pandemic that has turned New York City into a ghost town, Judge Michael E.

Wiles ruled against two motions: one that sought to remove McClatchy’s outside legal counsel and one to block a second law firm from investigating the transactions, which restructured the company’s debt in 2018 and 2019.

In another piece of good news for McClatchy, the judge approved $50 million for the company to use during the bankruptcy process. McClatchy had faced an April deadline to secure this debtor-in-possession financing.

The motions about the law firms came from Benjamin J. Higgins, the Justice Department’s bankruptcy trustee appointed to the case. A trustee operates as a courtordered referee to ensure that a company seeking protection from creditors is submitting accurate information.

Higgins told the judge that the case essentially comes down to whether debt restructuring done by McClatchy and its largest and most protected creditor, Chatham Asset Management, was fraudulent. The transactions, he said, are “one of the, if not the, major issue in this case.”

McClatchy is the parent company of the Miami Herald, el Nuevo Herald, and other media companies.

Kevin G. Hall: 202-383-6038, @KevinGHall