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SF Weekly ordered to give 50% of revenues to rival

Winning a lawsuit is one thing, collecting the money from the loser is another.

Two years ago, a lawyer for Bruce Brugmann’s Bay Guardian convinced a San Francisco jury that the SF Weekly and its parent company were selling ads at below the cost of production in order to gain market share and run Brugmann out of business. A jury on March 5, 2008, awarded Brugmann $6.39 million. A judge added $9.2 million in penalties. Since then more than $5 million in interest has accrued, bringing the total to $21 million.

For the past several months, Brugmann has been attempting to collect his money. In January, he got a court order seizing two of the SF Weekly’s delivery vans and he is allowed to collect rent from the SF Weekly’s subtenants.

But that was nothing compared to the bombshell of an order Superior Court Commissioner Everett Hewlett issued on Tuesday that requires the SF Weekly and all of its advertisers to immediately begin remitting advertising revenues to the Bay Guardian.

The Assignment Order also requires SF Weekly’s credit card processing company to remit 100% of the credit card payments directly to Bay Guardian rather than to SF Weekly, according to the Guardian.

From now on, the Guardian will get to keep 50% of the Weekly’s revenue.

Additionally, SF Weekly must turn over to the Bay Guardian a list of all its advertisers and the amounts that they currently owe to SF Weekly.

“The Village Voice folks first claimed that we would never collect anything, then they claimed that we would never collect more than a few thousand dollars, but the amount that we will now be collecting is certainly very significant,” Brugmann said.

At a Feb. 11 hearing, the Weekly’s parent company, Village Voice Media Holdings, argued that seizure of the ad revenue would violate the rights of Village Voice Media’s main creditor, the Bank of Montreal, which has lent the chain $80 million, according to a Chronicle report.

Andy Van De Voorde, executive associate editor of Village Voice Media Holdings and the reporter who covered the 2008 Guardian-v-SF Weekly trial, denied this week that the ruling will force the chain of alternative papers into bankruptcy. He told a sister publication, Westword in Denver, that the company is optimistic about its chances in an appeals court, even though no hearing date has been set. He notes that the Guardian’s lawsuit named the SF Weekly and New Times Media as defendants, but not the current holding company, Village Voice Media Holdings.

Van De Voorde also told Westword: “The Guardian is trying to drum up headlines and damage our business by creating the entirely inaccurate perception that we’re going to start selling off papers in order to meet this judgment. And that’s not going to happen.”

Below is the text of a Van De Voorde memo sent to all Village Voice Media employees:

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