Eason

At today's equity auction, federal bankruptcy judge Caryl E. Delano gave control of Creative Loafing, Inc. to the company's largest creditor, Atalaya Capital Management. Atalaya's all-cash bid of $5 million won out over Creative Loafing CEO Ben Eason's bid of $2.32 million in cash and other securities. The deal is expected to close within 10 days. We've got a roundup of all the news here.

Creative Loafing (Atlanta)'s Thomas Wheatley is in Tampa covering the proceedings. He reports that CL CEO Ben Eason's opening bid was $2.3 million, including $825,000 cash and the rest in "in-kind contributions." Atalaya Capital Management countered by bidding $5 million in cash.

Today's equity auction should be the culmination of nearly a year of bankruptcy court proceedings for the six-paper company. Creative Loafing (Atlanta) is reporting that creditor Atalaya Capital Management is trying to disqualify the other bid for the company, which has been put together by CL CEO Ben Eason. Atalya, calling Eason's bid "facially incomprehensible," is arguing that the sources for contributions included in Eason's bid "are not clear." Meanwhile, the Chicago Reader reports that Atalya managing partner Michael Bogdan has been calling CL publishers to assure them the hedge fund doesn't want to run the company into the ground. On the call to Chicago, Bogdan was joined by former Los Angeles Times editor James O'Shea, who would become a CL board member if Atalya wins control of the company. O'Shea tells Michael Miner that Atalya would make former Des Moines Register president Richard Gilbert interim CEO upon taking over.

No surprise here: Creative Loafing CEO Ben Eason and the company's largest creditor Atalaya Capital Management both tell the Atlanta Journal-Constitution they have high hopes for next week's auction of the company in Tampa bankruptcy court. "I think we are absolutely the best bid," Eason says. "Any bid has got to have cash, management and know-how, and be in a position to run the business and pay off debt. ... We have all of that." But Atalaya managing partner Michael Bogdan begs to differ. "We are going to come into court with a bid we believe will prevail," he says. "And if somebody starts with higher bid (sic), we are absolutely willing to raise our bid." It's expected that Atalya will bid a higher dollar figure than Eason's group, but Eason has said he will ask the judge to consider publishing expertise as part of deciding what the "highest and best" bid for the six-paper company is. The auction is slated for Tuesday, Aug. 25.

The Creative Loafing CEO tells the Chicago Reader he is working on a bid for the company that consists of three components: Eason and his family; BIA Digital Partners, who CL owes $10 million; "and managers from all across the company." Eason says the idea is to couple the pay cuts taken by the 25-30 managers with an offer of equity in the company and a chance to join the bid. "If it loses, Eason says, they'll be paid their deferred salaries out of auction proceeds," the Reader reports. "Managers who remain on the sidelines will get paid back either way." The idea is one way Eason hopes to set his bid apart from the bid expected from Atalaya Capital Management, CL's main creditor. He hopes the show of unity will impress the bankruptcy judge, who will hold the auction for the six-paper chain on Aug. 25. "You've got managers clearly invested in the business, in continuing to run the business, and in looking to keeping it going," Eason says. MORE: In other CL news, a Chicago blogger gives his in-depth analysis of the company's value.

In today's bankruptcy hearing, the judge said she will wait until the Aug. 25 equity auction to define what the "highest and best" offer will be, a decision that CL CEO Ben Eason has said will be of utmost importance to the future of the six-paper company. "While today's hearing about the rules and procedures for the bidding was given a pretty high-drama buildup ... it didn't live up to its billing and was actually a complex, confusing, and undramatic court session," Creative Loafing (Tampa)'s Wayne Garcia writes. Following the hearing, Eason told Garcia he's considering stepping down temporarily as CEO to focus on putting together a new bid for the company, though he said he hasn't made a decision yet and has no timetable in mind.

CL CEO Ben Eason has said that today's hearing (rescheduled from Monday) will likely determine whether or not he will be able to retain control of the six-paper chain. The actual auction is slated for Aug. 25, but Eason says that if the judge allows unfettered bidding by Atalaya Capital Management, the company's largest creditor, he may have no chance. He thinks that would be unfair and will ask the judge to restrict Atalaya's ability to bid. "What you'll see is the judge grappling with a core issue: How do you preside over a fair auction where one of the bidders has an advantage that would cause others not to bid," Eason says. "It's like pulling money out of one pocket and putting it into another."

Ben Eason tells the Chicago Reader that the key upcoming date in the ongoing bankruptcy saga of Creative Loafing is not Aug. 25, when the auction will be held, but July 27, when the judge sets the rules of the auction. He says the judge should restrict the ability of lender Atalaya Capital Management to bid on the company because "they'll put their money in and immediately take it out." He says that the issue should not just be who has the highest bid for the company, but the "highest and best" bid, which Eason thinks will be his. "For me it's my passion, my life, and everything," he says. "The real key here is not a financial play -- it's how everybody uses their publishing smarts and knowledge of online to fuse those models together. The game is not who's got the most money but who's got the most smarts to make the transition."