New York Post Still in Limbo
The New York Post’s future remained in limbo Friday even though a federal bankruptcy judge approved its sale to acting Publisher Steven Hoffenberg.
Judge Burton Lifland said there was “no viable alternative” to Hoffenberg’s offer, which involves no cash but the assumption of the Post’s debts, which total at least $25 million. Lifland is overseeing the personal bankruptcy of Post owner Peter Kalikow.
But Friday’s hearing made it clear that Hoffenberg may not be financially viable either.
Nathan Fuchs, a Securities and Exchange Commission lawyer, told Lifland that late Thursday Hoffenberg had asked to transfer $500,000 from his Towers Financial Corp. to Bankers Trust to cover checks written by the Post. The SEC opposed the move, fearing that it would reduce the money that may be left for investors whom it alleged in a recent lawsuit were cheated by Hoffenberg and Towers. Towers, which collects corporate debts, has sold $400 million of high-yielding notes to investors.
U.S. District Judge Whitman Knapp, who earlier this week froze Hoffenberg’s assets, refused the transfer.
Knapp’s refusal to release the money highlights a crucial hurdle Hoffenberg must cross before he can buy the tabloid. Hoffenberg has promised to pay about $4.5 million in withholding taxes taken out of employees’ paychecks but not turned over to the government. Hoffenberg cannot guarantee any payments without Knapp’s approval.
Hoffenberg is expected to seek Knapp’s approval to honor that promise early next week, and said he believes that the $500,000 transfer was denied because it was an “impromptu” request.
With Hoffenberg’s assets tied up by the SEC, Kalikow’s lawyers have pressed him for more collateral and received pledges of stock in a Newport News, Va., nursing home, among other assets.
During a court recess in which Hoffenberg sparred and shouted with reporters and SEC lawyers, the prospective Post publisher said the nursing home is owned by a friend. “I have about 20 friends who have said they will stand behind the guarantees” for payment of the payroll taxes, he said.
