Judge sets hearing on contempt order for SF Weekly's bank

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Superior Court Presiding Judge James McBride April 1 granted a motion by the San Francisco Bay Guardian to set a hearing for the Bank of Montreal, the lead bank for the SF Weekly and its parent chain, to show cause why it should not be held in contempt of court for interfering with a judge's order in the Guardian's attempt to collect on its $2l million plus judgment in a 2008 predatory pricing trial.

McBride set the hearing for April 30 and said that he would not hear the case but would assign another judge to hear it.

He said at the beginning of his remarks that the Guardian in its briefs had established a prima facie case for a hearing.
After hearing oral arguments from Guardian attorneys Richard Hill and Jay Adkisson, and Bank of Montreal attorney
Dan Falk, McBride ruled in favor of the Guardian's motion.

The motion addresses the latest twist in the efforts by the Weekly’s parent company, Village Voice Media, to duck payment of the judgment. For more than two years, since a jury ruled in the Guardian’s favor, VVM and the Weekly have been hiding behind a complex corporate structure and a cozy relationship with a banking syndicate and have refused to pay the debt.

The Guardian has seized two of the Weekly’s vehicles and the rent that subtenants pay the Weekly, and on March 9th, Court Commissioner Everette A. Hewlett Jr. ordered the Weekly to turn over half of its ad revenue to the Guardian.

The Guardian contacted the Weekly’s advertisers and advised them of the order. But, according to the Guardian brief, “after BMO received notice of the 9 March 2010 order, it began contacting all of the advertisers subject to the Assignment Order and instructed them to disregard that order and make payments directly to BMO.”

The Bank of Montreal, which heads a banking syndicate that has helped finance VVM’s expansion over the years, argues that VVM owes $77 million on a loan, and on March 12th, the syndicate declared the loan in default. That, the bank argues, means that BMO gets all of VVM’s money and that the Guardian is second in line.

However, the chain was valued just two years ago at $191 million, and under California law, BMO is required to marshal the assets of VVM – that is, to do an inventory of what the company owns and what it’s worth – so that other debtors can be paid.

“I have three times requested in writing to BMO that they marshal the assets of SF Weekly LP and New Times Media LLC, however BMO has never responded,” Adkisson stated in his court filing.

Hewlett has already said in open court that “it is possible that [BOM is] in contempt of court.”

The Guardian will be back in court April 14th asking that a receiver be appointed to take control of SF Weekly’s finances.

The banks in the syndicate that are holding the VVM debt (as of March, 2009) are Bank of Montreal, U.S. Bank, Wells Fargo, WestLB AG, Rabobank, BNP Paribas, and Brown Brothers Harrimann. You can read Adkisson's filing here (PDF)

Comments

So great.

Posted by Guest on Apr. 02, 2010 @ 2:47 pm

The Guardian had better consult with an experienced Chapter 11 creditor bankruptcy attorney in case the Weekly or VVM decides to file a Ch 11 in order to get rid of some of its debts. This is a common tactic of large corporations. I don't know what the ramifications would be, but it would be better for the Guardian to be prepared than to be taken off guard. Chapter 11s are very complicated, and if the Guardian were not properly prepared, it could lose its rights to the judgment damages.

Posted by Jeff Hoffman on Apr. 03, 2010 @ 11:23 am

For something you "didn't want to happen", you seem to have no problem
talking and
talking and
talking and
talking and
talking anf
tlaking about it... my typing went to hell at the end

Posted by Karl Marx on Apr. 03, 2010 @ 7:03 pm

"Karl"

If the SFBG had settled for, say, a million, no doubt they would have gotten their money by now and then they wouldn't feel the need to endlessly bore us all with whining about how they aren't getting their money.

SFBG sued the Weekly knowing that there was a "first mortgage" on the defendant and that they would only get the scraps left over.

SFBG keep cooing about how they have already gotten 2 delivery trucks (BFD). And that might end up being all they get.

If I owned the Weekly, I'd file BK, let SFBG collect a few scraps, and then start a new paper to compete with BG.

Enough already with this stupid crap.

Posted by Tom Foolery on Apr. 04, 2010 @ 6:21 am

Then I want to see them put their money where their mouth is and pay 50%+ of that in income taxes to the city of San Francisco - on a voluntary basis. I mean - shouldn't The Guardian put its money where its mouth is on taxing "windfall profits" as well as their call for a new corporate income tax to benefit the city? Charity starts at home - and while the Guardian staff may have to forgo a few shopping sprees at American Apparel (Sarah Phelan) or salon visits to get their tips bleached (Steven Jones) it'll all be worth it when they realize the many SEIU jobs their donation will save ;-)

Posted by Lucretia the Trollop on Apr. 04, 2010 @ 7:39 pm

Karl-
If the SFBG & the AAN didn't talk about this ad nauseam, many people might think SF Weekly/Village Voice Media DIDN'T break the law---they did. The fact of the matter is that the SF Weekly could only compete with an institution like the Guardian through their predatory pricing & corporate umbrella that being a chain paper provided them. The big dog lost for once to the little guy & I for one will never tire of hearing this story rehashed again & again. However, your crying that the Guardian is, "talking & talking & talking" when all they're really doing is updating their readers as to the current state of the case makes it sound like you should switch to the daily papers for your news....USA Today probably has a crossword you can finish.

Tom-
"If I owned the Weekly, I'd file BK, let SFBG collect a few scraps, and then start a new paper to compete with BG.

Enough already with this stupid crap."

I assume you meant your stupid crap & I'm super glad for all of us that you DID stop it after these bonehead statements. You're an idiot.

Posted by Guest on Apr. 06, 2010 @ 10:06 am

No laws were broken. The reason I know this? The suit was raised in civil court and not in criminal court. Credit the VVM attorneys with the worst jury selection voir-dire in publishing history as the only reason that raging idiots were allowed to sit in judgment on this conflict in a way that only San Francisco bleeding-hearts can.

It was the Guardian who couldn't compete with the Weekly on a level playing field, and it was the Guardian who attempted to do at the end of a gun what it could not do in the free market.

The Guardian's hypocrisy is tectonic is scope and magnitude.

Posted by Guest on Apr. 09, 2010 @ 12:28 pm