Attorneys questioned Santa Barbara News-Press owner Wendy McCaw for two hours at a Thursday bankruptcy hearing, and dug into the business’ operations and the assets claimed in court documents.
McCaw’s Ampersand Publishing, parent company of the News-Press, declared bankruptcy on July 21, the same day the newspaper stopped publishing to its website and told all employes their jobs were eliminated.
The bankruptcy documents list few assets and more than $5 million owed to creditors such as former employees, vendors, utility companies, local businesses, and subscribers.
The assets conspicuously exclude real estate because McCaw transferred the business’ properties in 2014 to separate limited liability companies she controls, and apparently paid nothing to do so.
Those properties include the downtown Santa Barbara News-Press building at 715 Anacapa St., a parking lot across the street, and the newspaper’s Goleta printing press property at 725 S. Kellogg Ave.
McCaw said Thursday that the News-Press had no lease agreements and paid no rent to occupy the buildings, even after Ampersand Publishing no longer owned the properties.
The section of bankruptcy documents where leases would be is blank.
“With nothing listed there, I have questions,” said attorney Michael D’Alba of Danning Gill.
Bankruptcy trustee Jerry Namba, a Santa Maria attorney, hired the firm as bankruptcy counsel for this Chapter 7 case.
“Was there a lease agreement for the debtor to occupy the space at Anacapa?” D’Alba asked.
“No,” McCaw said.
“How did it occupy the space, under what terms?” he continued. “It just occupied it,” she said.
“Did it pay rent?” D’Alba asked. “Uh, no,” McCaw replied.
She said there was no property management company for the Anacapa Street or Kellogg Avenue properties.
D’Alba also asked about the 2014 property transfers.
“What’s your understanding, Ms. McCaw, of what this (grant deed) document accomplished?” he asked.
“It accomplished putting the real estate into a LLC,” McCaw replied.
He also asked if any money was paid, and she said no. He asked if anything of value besides money was given over, and she said no.
Right after she replied, her bankruptcy attorney, Anthony Friedman, advised her that if she doesn’t know an answer, she can say she doesn’t recall.
When D’Alba asked if 715 Anacapa LLC gave anything to the debtor (Ampersand Publishing) in exchange for the real estate, McCaw said she didn’t know.
When asked who would know, McCaw said her attorney, Amber Henry, might.
Friedman and Henry both objected to questions about the property transfers, saying they happened 10 years ago and weren’t relevant to the bankruptcy proceedings.
D’Alba said he wanted to ask questions about it and the “fact that (the debtor) transferred some real estate and possibly received nothing in exchange.”
Attorneys Ask About Newspaper Operations
“I don’t recall” and “I don’t know” were common responses to D’Alba’s questioning, and McCaw appeared to know few details about the newspaper’s operations.
She said she wasn’t sure where the newspaper’s archives are, or how far back they go. She wasn’t sure whether the News-Press had social media pages (it does) or who filed income taxes for the business.
She wasn’t sure who the managers were of Ampersand Publishing when it was created to purchase the Santa Barbara News-Press from the New York Times in 2000.
When D’Alba asked about artwork listed as assets, she was unsure how much there is and where it is – it could be in either or both of the Anacapa Street and Kellogg Avenue buildings, she said.
When D’Alba asked about the newspaper’s archives, including bound copies and microfiche, she wasn’t sure if it was stored at the Anacapa Street building still or it was moved to Goleta when all staff were moved out of the Santa Barbara building this spring.
When asked about archives of photographs, she said, “I would assume the photographs must be someplace; I don’t know where they are.”
Yolanda Apodaca, whose title was director of operations, would know some of that information, McCaw added.
Friedman said Apodaca provided information for the initial bankruptcy documents, which McCaw reviewed before they were filed with the court.
D’Alba asked about usernames and passwords to “resurrect the website if that was ever to be desired,” and McCaw was not sure who would have access to that.
Did the newspaper count the number of visitors to its website? “Probably,” McCaw said.
As of this week, the website appears to be gone.
The Thursday hearing was conducted over the phone with all participants calling in.
Another attorney who spoke at the end of the call said he represented potential buyers, and asked again about a historical list of subscribers and the newspaper’s archives.
If Namba, the trustee, can get access to the newspaper’s servers, that could yield a lot of the information attorneys are asking for, he noted.
McCaw said again she wasn’t sure where the microfiche archives are now, but they used to be stored on the second floor of the Anacapa Street building.
“I don’t know the dates, I just know it goes way back,” she said.
Another meeting of creditors in the case was scheduled for October.
Former Employees Among Bankruptcy Creditors
The former daily newspaper moved all staff out of its downtown Santa Barbara newsroom building in April, and stopped printing in June, blaming “power issues” at the Goleta press facility.
It posted entries online for the next month or so, until the bankruptcy filing.
Friedman said Thursday that some employees who are owed final paychecks have filed wage claims as part of this case.
Bankruptcy court documents list assets including $532.96 in the bank, office furniture and computers, printing materials, and the newspaper’s archive of “unknown” value.
The list of the top 20 creditors includes several former News-Press employees who are owed millions of dollars for court-ordered backpay due to labor violations.
A National Labor Relations Board case has stretched on more than 15 years. McCaw’s company was found liable and ordered to pay employees $2.2 million, plus interest, but the payments haven’t been made.
The NLRB ordered the newspaper company to pay Teamsters Union employees for losses from discontinued merit pay raises and using non-union workers at the company, and backpay to Dennis Moran and Richard Mineards who were unfairly fired.
Moran told Noozhawk the bankruptcy “is not a big surprise,” but that it does make his backpay more uncertain.
Mineards is owed more than $650,000 plus interest “after being laid off from the rag without any warning in January 2009,” he told Noozhawk.
“McCaw has obviously shielded her properties to avoid having to pay out the millions she owes to so many people,” he said. “But I think she will find that her bankruptcy filing will go anything but smoothly, particularly if Ira Gottlieb of the Teamsters has his way!”
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