When Alice Rogoff took the stand in an Anchorage court today, she phoned it in.
Possibly from Nantucket.
And presumably, Rogoff was with an attorney passing her notes to help her dodge the questions of attorneys who were in the courtroom and who were valiantly attempting to “pierce the corporate veil” and get access to her personal assets to satisfy her many creditors. Rogoff played dumb a lot.
That “piercing the veil” line of questioning was apparent in this afternoon’s expedited bankruptcy hearing, and her “I don’t recall,” “I don’t know” and “I do not remember” answers were equally apparent in their attempt to obscure the financial trail that leads back to her alone.
“It depends on the definition of immediately,” she said, when asked how long it would take to get her presses out of the warehouse she’s rented on 59th and Arctic. “I’m not in that business so I am giving opinions that are not worth very much,” she continued, when asked about how much her presses were worth and if there were any potential buyers.
The case in front of Judge Gary Spraker was to determine if, in the current emergency in which Rogoff finds the Alaska Dispatch News, she can access $350,000 in loaned money from the only potential buyer that seems to be real, the Binkley Company LLC. That would be just enough to keep operating another two weeks, pay off the past due insurance, and keep the delivery contractors from ditching her newspapers in the inlet.
In the end, both the judge and Northrim Bank agreed to allow the Dispatch, which Rogoff still officially owns, to use just $80,000 in cash collateral to pay the delivery crew tonight.
Friday, the remaining questions surrounding the “Debtor in Possession,” or DIP loan, will continue in court, and those will be stiffer headwinds. Rogoff and the Binkley Company LLC are trying to hammer out a deal that keeps the newspaper from going under.
Rogoff told the court that she has been a largely absentee manager of her newspaper, with people running it on a day-to-day basis whom she considers highly competent.
She disputed the notion that any radical changes were needed before the proposed sale to the Binkley Company closes, saying any major changes might make it more difficult to sell, if the Binkley deal fell through.
“It’s prudent for the purpose of a growing concern — is to let it exist in its present size and fashion until it is determined who the next owner will be,” she told the judge by phone.
She also asserted there is no need for a manager to be appointed to oversee the operations as the Chapter 11 bankruptcy makes its way through the process.
“The need for a manager at this time is quite exaggerated,” she told the judge. When asked if she had a management agreement with the Binkley Company, she said “No.”
Just last week, however, she signed an agreement with the Binkley Company that included this provision:
“2.8 Manager Appointment. Debtor will appoint a manager of Buyer’s choice effective immediately following the filing of the bankruptcy petition”
This clause certainly has the look of a management agreement to us, which raises questions about the veracity of Rogoff’s testimony.
The Binkley Company has hired former Anchorage Daily News publisher and turn-around expert Jerry Grilly to help keep the place running, and the Binkleys have been in charge of operations since the newspaper rolled off the presses on Saturday night.
Even Erin Austin, the lead accountant for the company, told the court she believes she works for the Binkley Company now. The staff box has been changed to reflect that Ryan Binkley and Jason Evans are co-publishers.
Rogoff, answering questions from her own bankruptcy attorney Cabot Christianson, said that she had lost a painful amount of money. She is attempting to sell the newspaper for $1 million, which will only settle a small number of her debts and obligations. She has sunk more than $37 million into the paper since buying it in April, 2014, she said.
“That is an extraordinarily high price,” her attorney remarked.
“The simple reason, my goal was to increase and expand the quality and quantity of journalism in Alaska. We have done that successfully,” Rogoff told the court. She then talked about the employees and their families, and that how Chapter 11 is the only way for her to not harm those employees.
Rogoff seemed unaware that she “expanded the quality and quantity of journalism” in Alaska by not paying bills to many other Alaskans, including several small business owners who are out several hundred thousand dollars. Those weren’t families that greatly concerned her, apparently, but by taking the newspaper to the brink of abrupt closure, the question about whether she truly cares about her “newspaper family” is a reasonable one.
In fact, when Ryan Binkley, the head of the company now attempting to save the paper from extinction, took the stand, he laid out the many efforts that he and his family had made to salvage the paper months ago.
Binkley said they were contacted by Rogoff in April, as she was looking for investors or a buyer. The discussions with Rogoff went “hot and cold” until last week when there were apparently no offers on the table from any other buyers.
Rogoff had already accepted one of the Binkleys’ offers in June, but then rejected it at the last minute. Meanwhile, the Binkleys had uncovered more liabilities than were originally revealed by Rogoff. There could be even more, he said, acknowledging the significant risk his company is taking.
Rogoff’s representatives called the Binkleys last Thursday and pleaded with them to save the paper, or last Friday’s edition would be the final one. The Fairbanks family business has worked feverishly since then to hammer out an agreement with her that would allow them to buy the paper, but not all of her debt.
As the bankruptcy hearings continue tomorrow, Rogoff will find that at least two entities are objecting to the terms of the settlement that could cut them out: The Municipality of Anchorage, and Arctic Partners, which owns the building where Rogoff began installing two presses, but then abandoned the presses and the building upgrades when costs became too great.
JUDGE’S DECISION: PAPER CARRIERS ARE LIKE EMPLOYEES
For years, publishers in America have fought the notion that newspaper delivery people are employees. They are, in the eyes of the law, independent contractors.
But Judge Spraker, in deciding to allow them to be paid tonight when they arrive to pick up their bundles, said he was considering this in the same category as a wage for the purpose of establishing a priority. “This is an elegant solution to an evolving situation and problem,” he said.
Cabot Christianson, Rogoff’s bankruptcy attorney, agreed, saying the judge was spot on. But as the new owners take possession, they’ll want to watch that one.
In June, the California Court of Appeal ruled that carriers for the San Diego-Union Tribune are employees of the company, not independent contractors. The court said the workers are entitled to reimbursement for business expenses. This, after the delivery carriers sued the newspaper in 2009 in a class action lawsuit for failing to pay minimum wage and reimburse for expenses or allow meal breaks or rest periods. The restitution is likely to be in the millions.
While the San Diego Union has appealed, it’s the kind of situation that publishers do not wish upon themselves, as they work in a business where margins are already difficult to achieve.
[Read CraigMedred.news: Tough neighborhood]
[Read: Ruh-roh: Judge will decide who gets paid; Northrim is first]
