Bankruptcy Judge Dismisses Challenge to UPI Reorganization Plan
WASHINGTON (AP) _ A federal bankruptcy judge dismissed a challenge to United Press International’s reorganization plan, moving the sale of the news agency to a Mexican newspaper publisher one step closer to fruition.
Judge George Francis Bason Jr. on Tuesday denied an objection filed by UPI’s chief stockholders, Douglas Ruhe and William Geissler.
Emil Hirsch, a lawyer for Ruhe and Geissler’s Media News Corp., argued that UPI management did not have the authority, without their approval, to file a plan of reorganization. Bason ruled to the contrary.
″We’re on a track right now for all things to be set by July 1,″ said Francis P. Dicello, an attorney for UPI.
Ruhe and Geissler, along with a consortium headed by an unsuccessful bidder for UPI - Financial News Network - have tried repeatedly to block the sale of the news service to a partnership headed by Mario Vazquez Rana, a Mexican newspaper publisher.
Hirsch said he did not know whether his clients would appeal Bason’s ruling or whether Media News Corp. would file its own reorganization plan for UPI.
Bason told Hirsch, ″It is time for MNC to fish or cut bait″ on whether it intends to submit a reorganization plan.
The reorganization plan filed jointly by UPI management, the Wire Service Guild and a committee of UPI’s creditors calls for Vazquez Rana’s partnership to buy the news agency for an estimated $41 million.
Bason said Tuesday that he would hear any challenges to UPI’s disclosure statement on May 12. He would then rule on the disclosure statement, which outlines UPI’s financial status.
Assuming the judge approves these documents, creditors would be given the opportunity to vote formally on the reorganization plan.
The final step in the news service’s emergence from bankruptcy court proceedings would be for the judge to approve the package, turning over UPI to Vazquez Rana’s New UPI.
The reorganization plan proposed by UPI stipulates that Vazquez Rana will supply the news agency with $15 million in working capital by no later than Dec. 31, 1988.
Of the $15 million, $2.5 million is to be provided no later than the closing of the purchase. New UPI already has provided $1 million of the $2.5 million for immediate requirements.
UPI filed for protection from creditors under Chapter 11 of the bankruptcy code on April 28, 1985. It reported $40.2 million in debts and nearly $24 million in assets as of May 31.