Creative Loafing Inc., which owns the Chicago Reader and five other alternative weeklies, filed for Chapter 11 bankruptcy Monday in Tampa, Florida, where the company's headquartered. CEO Ben Eason didn't want to put a number on Creative Loafing's total debt, but it grew considerably last year when the company bought the Reader and the Washington City Paper, and today it "owes more than it can pay back."

In a telephone conversation with executives of his newspapers, Eason sounded relentlessly chipper, and he emphasized that all his company seeks from bankruptcy is the opportunity to restructure its debts. Liquidation is not being considered. "This is a profitable business," he declared. "The company has a good cash flow. It has a good market position. Online revenues more than doubled in the last year." But print revenues have fallen off dramatically over the past year at Creative Loafing and throughout the newspaper business. He said in the past three months total revenues were down 10 to 15 percent from the same months a year ago.

"This isn't a failing company," said Eason in e-mail to the same executives, "but instead one caught squarely by this challenging economy between old media and new media." He insisted that the purchase of the Reader and City Paper "has been successful," yet "the assumptions we made have not turned out to be so successful. The print business has been under siege from all quarters" --  readership excepted. 

Would Creative Loafing be filing for bankruptcy if it hadn't bought the Reader and City Paper? I asked Eason. He didn't answer directly, but he conjectured that any owner would be facing the same tough climate. And the old owners wouldn't have had the benefits of scale -- benefits that made adding to Creative Loafing's existing chain seem like such a good idea to Eason a year and a half ago.

Creative Loafing had also been considering reducing the editorial budget to help manage its debt. Now Eason says for the time being those cuts are on hold, which means that an immediate effect of bankruptcy on the Reader is to make it easier to keep up its standards.