As economy sinks, McClatchy's plan for quick sale hits roadblock in bankruptcy court

McClatchy Co.’s attempt to quickly exit bankruptcy by finding a buyer hit a snag Wednesday when a federal judge ordered all parties to reach an agreement on the sales process even as the nation’s economic uncertainty deepened.

The local media company had asked bankruptcy Judge Michael E. Wiles to sign off on modifications to some terms of its bankruptcy financing. Also in the motion was the first official notice that the company has been speaking to potential buyers, prompting objections from a committee of less protected creditors as well as the trustee serving as an independent watchdog in the case.

Wiles must approve the sale of the bankrupt company, so pursuing buyers before obtaining the court’s input on the process puts any potential deal at risk, the judge said.

“I cannot say strongly enough how crazy that seems to me,” he said, ordering the parties to come back to him Monday with an agreement on process, or risk having him decide. “Maybe you don’t trust what I will do with a sale process?”

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