for Bigtrial.net
The new owners of The Philadelphia Inquirer are at it again, suing each other in the courts of two different states.
First, Lewis Katz, leader of a minority group of owners, filed a motion in Philadelphia Common Pleas Court, seeking to dissolve Interstate General Media [IGM], and publicly auction off the company that owns the Inquirer, Philadelphia Daily News and philly.com.
Then George Norcross III, leader of a majority group of owners, filed a petition in the Court of Chancery in the State of Delaware that would compel a private auction of the company that would be restricted to the current owners.
The war in two state courts was revealed by the Norcross side in a letter made public from owners Norcross and William P. Hankowsky to Katz. In the letter, dated Jan. 3, owners Norcross and Hankowsky accuse Katz of putting the survival of the city's only two daily newspapers at risk.
Norcross and Hankowsky wrote Katz that they had hoped to avoid going to Chancery Court, "but your surprise decision to file a motion to dissolve the company risks not just the progress the company has made, but presents a real threat of another bankruptcy and additional job losses for our employees."
"It is clear from your actions," Norcross and Hankowsky write to Katz, "that you are focused, and have been for many months, on creating a crisis in the company, risking the progress the company has made since its purchase and threatening the jobs of IGM employees."
In his letter to Katz, Norcross and Hankowsky detail a half-dozen settlement proposals that they claim were rejected by Katz.
"You have referred to referred to the newspapers and philly.com as 'public trusts,' important to protect and preserve," Norcross and Hankowsky wrote Katz. " It is past time to begin treatment them as such. We have taken this action because we cannot let the future of our company, our employees and readers be held hostage by your unwillingness to act in its best interests."
Among the proposals rejected by Katz, Norcross and Hankowsky said, was an offer made last Oct. 13 to purchase Katz's shares for "a 12 percent premium over your initial investment," or $29 million, a $3 million increase over an initial investment of $26 million.
The feuding owners were in court last year over the decision by Publisher Bob Hall to fire Inquirer Editor Bill Marimow. Katz filed suit first in Philadelphia Common Pleas Court; Norcross countersued in the state of Delaware's Chancery Court, where IGM was incorporated.
Philadelphia Common Pleas Court Judge Patricia McInerney decided she had jurisdiction. Then Judge McInerney ruled that both Hall and Marimow should return to office, insuring the stalemate among the feuding owners would continue into the New Year.
Hall was supposed to retire by New Year's Eve; Marimow has a contract to stay on until April 2014.
In rejected settlement proposals, both Marimow and Hall would have been paid through the end of 2014. In addition, Inquirer Editor Nancy Phillips, Katz's girlfriend, would become a reporter and return to the protection of being a member of the Newspaper Guild.
An immediate search was supposed to begin for a new publisher and Inquirer editor.
Now, judges in two states will have to figure out which court has precedence. And whether to hold a public or private auction.