Columbian seeks Chapter 11 bankruptcy protection

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The Columbian Publishing Co. filed for Chapter 11 bankruptcy protection on Friday in a move to resolve credit issues with Bank of America, primary lender on its multimillion dollar downtown building project completed last year.

Scott Campbell, publisher of the independent daily newspaper serving Clark County and Southwest Washington, said operations will continue unaffected by the filing and that his company will emerge from the situation in a few months "with renewed vigor and excitement for the future."

The Vancouver-based three-generation family-owned publishing company with 259 employees operates The Columbian newspaper, established in 1890 and the Web site www.columbian.com.

"Our overall audience remains strong - and we are still an excellent way for advertisers to get their messages to Clark County buyers," Campbell said. "Our new downtown office building, which could have been paid off with our modest profits in a normal or even a conventional bad economy, contributed to our problem. But our debt peaked at the same time the economy stumbled, and the scope of the downturn exceeded my worst fears," he said.

Friday's filing in U.S. Bankruptcy Court in Tacoma showed The Columbian owes approximately $17 million to the bank and to a host of unsecured creditors. Those creditors include Mason Nolan, a former Columbian executive and Washougal resident, $179,263; North Pacific Paper Corp., Longview, $95,000; GE Captial Solutions, Torrance, Calif., $84,331 and Page Coop, a production supplier, $30,000 and Inland Empire Paper Co., Spokane, $27,893.

The Columbian's difficulties began almost as soon as it moved into a new six-story $40 million office building at 415 W. Sixth St. in downtown Vancouver in January 2008. A sour economy and costs related to the building - where newspaper, advertising, circulation and newsroom operations occupied four floors - triggered three rounds of company-wide layoffs last year that cut more than 100 positions from operations. In December, the newspaper was forced to relocate to its former address at 701 W. Eighth St., where it had operated since the 1950s.

Al Kennedy, an attorney with Tonkon Torp LLC in Portland and The Columbian's bankruptcy representative, said he was confident the newspaper would be able to restructure its debt and emerge from bankruptcy in six months or sooner.

"Columbian creditors need to know that the company has gone through some significant changes in operations and restored itself to a cash-flow positive basis. The business is here to stay. It will reorganize and continue to serve the community."

Campbell pointed to several companies that recently transitioned through a Chapter 11 filing including Macy's, Delta Air Lines, Toys R Us and Shilo Inns, based in Portland. Currently in Chapter 11 are The Shane Co jewelers and Pioneer Place in downtown Portland as well as several media companies including those that own the Chicago Tribune and the Los Angeles Times.

"The Columbian has seen a 40 percent decline in advertising dollars over the past several years, most of this decline in the past year," Campbell said. "In response, we have reorganized, particularly over the past year, and we are positioned to come through this bad economy."

He credited Columbian employees for picking up additional responsibilities and bringing a "new level of teamwork, creativity and focus to the operation" that has been essential to its success.

Meanwhile, space in two top floors in the new Sixth Street building remains mostly leased, but ground-floor retail space has not been occupied. Tenants have not been found for the empty four floors once occupied by the newspaper, nor has a buyer been found for the building. Campbell is using NAI Norris, Beggs & Simpson commercial brokers to market the building.

The Columbian advised customers - readers and advertisers - in October that a Chapter 11 filing might occur because of a deteriorating business environment. Foreclosure action in early April by Bank of America appeared to set the stage.

The debt reorganization is complicated because the publishing company as well as a separate entity called Downtown Vitality Partners, owned by the Campbell family, are both debtors to Bank of America.

DVP owes money on the purchase of the new building site and construction costs related to the building's shell, while the publishing company owes the bank for four floors of office space build-out.

The publishing company is seeking Chapter 11 protection, not DVP, Campbell pointed out. DVP, separately, owes Bank of America $27 million.

Doug Ness, Columbian chief financial officer, said Bank of America officials have been working well with the publishing company and with the plan put in front of them. "We don't see significant disagreement between us and the bank," Ness said. "It now appears useful to the bank to complete the negotiations and final settlement through the Chapter 11 process."