June 20, 2024
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SBNP files for Chapter 7 bankruptcy, closes operation

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Wendy McCaw, a Hope Ranch billionaire with many assets in the Santa Barbara area, is no stranger to court proceedings, but her latest filing for bankruptcy could take quite a while.

On July 21, Ampersand Publishing, the controlling company for the Santa Barbara News-Press, filed for Chapter 7 bankruptcy, leading to the paper ceasing all operations and putting an end to one of the longest-running newspapers in the country.

McCaw is the owner of Ampersand Publishing. 

The Santa Barbara News-Press, which has been publishing since 1868, has not posted anything on its website since July 21 and has made no mention of the bankruptcy or if it has ceased operations.

However, an email from Managing Editor Dave Mason read that McCaw filed for bankruptcy on July 21 and essentially ceased all operations with that decision.

“All of our jobs are eliminated, and the News-Press has stopped publishing,” the email, obtained by the LA Times, read. “They ran out of money to pay us. They will issue final paychecks when the bankruptcy is approved in court.”

Mason did not respond to a request for comment. 

In the months prior to the bankruptcy, the News-Press had undergone a lot of warning signs. In October 2022, it ceased home delivery and by June, it had terminated its print edition entirely.

Some former staffers also confirmed that hours were being cut back in the months prior to ceasing all operations — another sign the paper was under immense pressure.

The Chapter 7 filing, which was filed in the U.S. Bankruptcy Court, Central District of California, pained a grim picture for the publishing company.

Anthony Friedman, a lawyer from Levene, Neale, Bender, Yoo & Golubchik, is the attorney representing Ampersand Publishing in this case. He did not respond to multiple requests for comment.

Chapter 7 bankruptcy specifically refers to liquidating all assets the company owns in order to pay off creditors.

According to the filing, about 808 people or companies were informed of the News-Press’s bankruptcy, many of which are subscribers who are owed at least a partial refund.

Other creditors include unpaid former employees, government entities, holding companies and more. The filing did not state which creditors were its largest.

Ampersand claims to have less than $50,000 worth of assets, according to the filing, meaning that it is unlikely the company will be able to pay off the $1 million to $10 million worth of liabilities it has.

It is also unclear how creditors, who have a scheduled meeting on Sept. 1, will be able to recoup any losses given the lack of assets.

While Ampersand Publishing does not have any assets, according to the filing, McCaw certainly does.

For years, the News-Press operated at 715 Anacapa St. in downtown Santa Barbara, a historic site worth about $15.2 million according to the Santa Barbara County Assessor’s latest report in 2023. The paper moved its operations out of the building in April. 

McCaw is the owner of the building, but in 2014, the building’s deed was transferred from Ampersand Publishing to another holding company still owned by McCaw.

A similar transition was made from Ampersand to a different holding company, again owned by McCaw, for the News-Press’s second location, its printing press at 725 South Kellogg in Goleta, in 2014 as well. 

That building is worth about $11.5 million according to the Santa Barbara County Assessor’s latest report.

When McCaw purchased the News-Press from the New York Times in 2000, for more than $100 million it has been reported, she also purchased the parking lot across the street from 715 Anacapa. 

That was also transferred to another holding company in 2014, owned by McCaw, and that property has a value of $3.1 million.

Despite the millions in assets McCaw owns, it is unlikely those assets will come into play during these proceedings. According to the courts, Chapter 7 bankruptcy only holds that the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay holders of claims.

And, in its filing, Ampersand claims to have no property available to pay creditors, estimating that “after any administrative expenses are paid, no funds will be available to unsecured creditors.”

Since being purchased by McCaw in 2000, the News-Press has gone through a number of controversies, including in 2007 when employees filed a series of unfair labor practice allegations against the publisher that garnered national attention.

McCaw still owes an estimated $3 million in back pay, fines, and interest that has accumulated since 2007 from the National Labor Review Board judgment according to the LA Times.

Regardless, the News-Press’s latest development has abruptly ended the paper’s operations, but the legal proceedings are far from over. 

email: jmercado@pacbiztimes.com