After losing a $15.9 million judgment for ad-price fixing, Village Voice Media LLC, may be forced into an involuntary bankruptcy. The company's rival Bay Guardian Co., won a lawsuit against Village voice which gave Bay Guardian a lien on all the Village Voice Media's newspaper properties. Village Voice has refused to pay the judgment claiming that it does not have enough assets to pay and continue operating its business. However, Bay Guardian has threatened to force Village Voice into bankruptcy by petitioning to put the Village Voice chain into involuntary bankruptcy to collect the debt. Under U.S. bankruptcy law, a lender who is owed more than $10,000 can file an involuntary bankruptcy petition to force payment of the debt. However this may not guarantee that they will receive full payment.
Village Voice Media contends it "is entitled to an injunction preventing defendant from seeking remedies against Delaware entities that are forbidden by Delaware law," according to court papers.
"There's not anything that we can do to prevent them from attempting to put any entity into bankruptcy, whether or not there's actually a basis for it," Randall Farrimond, an attorney representing Village Voice Media affiliates New Times Media LLC and San Francisco Weekly LP, said in an interview. "There's nothing that has come up recently, that I am aware of, that would trigger a bankruptcy proceeding."
Like others in the newspaper industry, Village Voice Media has been hit hard by declining revenue and readership. Village Voice's average weekly circulation declined 11 percent in the six months through June 2009 to 213,358. And in the world of newspapers, declining circulation could mean declining ad revenue and even bankruptcy whether voluntary or involuntary.