Editors' Note: Guest blogger Matt Hennie, a product of the legacy media, both gay and otherwise, launched Project Q Atlanta to cover LGBT Atlanta in September 2008.
Like a one-two punch only a heavyweight fighter can deliver, gay news consumers in three cities were first hit with the news that Window Media and Unite Media abruptly closed. A week later, there's this: The gay pubs they loved for their weekly fix of news and information were so financially troubled that they collapsed under the weight of $15.35 million in debt.
Welcome to bankruptcy court, dear friends. Now you know we've really made it when LGBT publications can share the headlines that have announced the death of scores of other newspapers in the last year.
The collapse of the two companies that published the storied Washington Blade, Southern Voice, South Florida Blade, 411 and David magazine isn't surprising. The companies have been in federal receivership for more than a year.
But what's shocking is the sudden collapse. Sudden as in change-the-locks-overnight kind of sudden, locking out employees and shorting them a month's pay. Dig into the bankruptcy filings, though, and you get some sense of what forced the hands of company executives.
The petitions for Chapter 7 bankruptcy – that's the kind that means liquidation, not reorganization – were filed in federal court Friday in Atlanta. Some 403 creditors are owed more than $15.35 million by Window and Unite. It's a staggering amount that touches all facets of their business.
Window lists claims of nearly $7.85 million to 277 secured and unsecured creditors, while Unite's claims include $7.5 million to 126 creditors. Combined, the companies owe $1.04 million in payroll and other taxes to federal, state and local agencies; $418,189 to printers in several states; $168,109 in rent in Atlanta, Fort Lauderdale and Washington, D.C.; $71,798 to distributors of the former publications; and $4,500 to two companies providing health insurance.
Window and Unite each list two New York-based creditors with secured claims. Avalon Equity Funding and M&T Bank hold claims of $4.97 million and $1.28 million, respectively, or $6.25 million from Window. A New York company named Avalone and M&T Bank hold identical claims of $4.97 million and $1.28 million, respectively, or $6.25 million from Unite. Claims from the three businesses include "all assets, equipments, account receivables, inventory, etc."
It's not clear from the filings if the identical amounts of $6.25 million listed by Window and Unite are the same debt, or if it's money that was split equally between the two companies. That may get explained when court hearings begin Dec. 7.
Avalon is the venture capital fund that owned Window and Unite, investing more than $7 million in SBA funds into the publishers that the federal agency says it has no hopes of recovering. The relationship between the gay publishers and Avalon dates to 2001, when the firm invested in Window to help it purchase the Washington Blade and the New York Blade, which closed earlier this year.
At the time, Window pairing with Avalon was the partnership that made possible the joining of Southern Voice and the Washington Blade into one company. For those inside the newsrooms – and I was there as editor of SoVo – it provided a huge boost in resources by bringing together two top-notch reporting staffs that benefited readerships of both papers. In hindsight, it turned out to be a deal with the devil that sank both publications and others, too.