Press; Post’s Struggle Illuminates Power of Bankruptcy Courts
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In the bankruptcy court hearing on the day that Abraham Hirschfeld first beat out Steven Hoffenberg for the right to sit in the publisher’s chair at The New York Post, there was an exchange between a lawyer and the judge that taught two lessons. It showed the power that courts have over troubled businesses that make the trip to the debtors’ court. And, most disappointing to the people who make their living writing and editing the news, it showed that in one sense, newspapering is just a business after all. It was 10 days ago, and Judge Francis G. Conrad, who usually sits in the Federal Bankruptcy Court in Rutland, Vt., was substituting for a bankruptcy judge in New York who was out of the country. A lawyer was pleading with Judge Conrad to give other potential buyers a chance to get into the bidding. Until then, The Post fire sale had produced only Mr. Hoffenberg, cashless because of his fight with the Securities and Exchange Commission, and Mr. Hirschfeld, who even then, it could be predicted, would provoke The Post’s staff and set an unsteady course for a newspaper already near death. But The Post needed cash right away. The others in court that day lacked concrete business plans backed by money, and they had waited too long to present themselves. No, said Judge Conrad firmly. There would be no delays. “I got up at 3 o’clock this morning to come here,” he said. “I caught a 5:40 plane from Albany, and we are going to rule today.” And so it was that Mr. Hirschfeld — an outlandish figure who tells off-color jokes to reporters, and in his first week in power voiced an ambition to become God (he says that was a joke, too) — won control of a newspaper that has been published for nearly two centuries. Whatever Mr. Hirschfeld may lack in social graces, he has millions of dollars, and money talks in Bankruptcy Court. In the interminable courtroom hearings, judges and lawyers made passing references to The Post’s heritage and the place of journalism in America. But those things don’t hold sway in Bankruptcy Court. This is a place for troubled businesses to get what the lawyers call a “fresh start.” The price can be high for that chance at a new business life, with the jobs and profits it might offer. The law gives Bankruptcy Courts broad powers to break contracts, to shrink the value of creditors’ claims and to make stock worthless. It even gives them the power to oust owners from their own businesses if that is what is necessary to make them work financially and pay the bills. Across the country in hard times, union workers in all sorts of industries have discovered that under the bankruptcy laws a company can turn its back even on labor agreements with decades of bloody history. One day, a union job can pay $10 an hour. The next, $5 an hour. In the newspaper business in New York this winter, Mortimer B. Zuckerman, the new owner of The Daily News, showed the power of bankruptcy laws. With The News no longer bound by its contract with the Newspaper Guild because of the paper’s bankruptcy, he dismissed 174 people the night he took title, and the union proved powerless to respond. Some say Mr. Zuckerman is saving The News by cutting costs and changing the power relationship between owners of papers and their employees. The Post, just one week into formal bankruptcy, is already feeling the power of the court. When Lifetime Isn’t Forever But it may have been in Mr. Zuckerman’s fight with the typographical union that the starkest symbol of a Bankruptcy Court’s power emerged. The paper’s remaining typographers had won a promise of lifetime job guarantees from a previous News owner in 1974. But the court said that was a promise that could no longer be honored because it was too burdensome to the new Daily News. The typographers appealed, and lost. What, they asked the appeals court, was the meaning of a promise if it could be broken with the stroke of a judge’s pen? “To this question, there is no convincing answer,” the appeals court wrote, “except perhaps that nothing is forever today.” Source : query.nytimes.com |