The plan gives creditors the iconic downtown building that houses The Philadelphia Inquirer and Philadelphia Daily News.
The company would raise $35 million in new capital from investors including housing mogul Bruce Toll, the Carpenters Union Pension Fund and others. Publisher Brian Tierney, a former public relations executive who led the group that bought the company three years ago, would presumably remain at the helm.
In a press release, Tierney called local ownership of the newspapers and Philly.com Web site critical.
"Today, Philadelphians once again stepped up in a big way," he said. "Local ownership is critical because it has led to a new era of journalistic excellence."
Toll is among the local investors who pooled $150 million to buy the newspapers in 2006 for $515 million, raising the rest through bank loans. The industry has since suffered steep revenue and circulation declines, and the company is worth far less today.
The company values its offer at $92 million, which includes $25 million to exit bankruptcy and the nearly $30 million value it placed on its flagship building and nearby parking lot.
The hefty documents filed Thursday do not address management, newsroom or labor issues.
The company's labor contracts with about a dozen unions expire Aug. 31, although all but one have agreed to month-to-month extensions. The local Newspaper Guild, which represents writers, photographers and advertising staff, rejects the extension on grounds the company has refused to start negotiations.
"They could be seeking major concessions, and we've already given enough over the last few years," guild administrator Bill Ross said this week, referring to the $25-a-week raises members deferred last year while Tierney and other executives took large bonuses.
Creditors who have drafted their own reorganization plan - and want new leadership - are almost sure to challenge the company's plan. Newspaper officials say the creditors' plan would saddle the company with at least $60 million in remaining debt, crippling it.
One industry analyst predicted the Inquirer and Daily News could survive, perhaps eking out single-digit profits, if they can shed their debt.
"Going forward, the newspapers probably will be smaller, thinner, have less journalism and certainly have lower profit margins," said analyst John Morton, who applauded Tierney's commitment to the news business.
"But if everything works out, Philadelphia will still have newspapers," he told The Associated Press.
The plan must be approved by Chief U.S. Bankruptcy Judge Stephen Raslavich, who recently stepped into the case amid a prior judge's illness. Raslavich has quickened the pace of the proceedings and displayed a sharp tongue, admonishing one lawyer for shoddy work and suggesting both parties have sometimes behaved like children.
Their feuds, he said this week, sometimes resemble a "schoolyard sandbox" fight.
Tierney did not immediately return a message Thursday seeking comment on the reorganization plan.
Fred Hodara, a lawyer for the creditors, had not seen the plan and declined comment. Creditors' lawyer Andrew Kassner, who represents Citizens Bank, did not immediately return a call for comment.
The latest Audit Bureau of Circulation figures, for six months ending in late March, show circulation falling 13.7 percent for the daily Inquirer to about 288,000 daily, about 12 percent to about 550,000 for the Sunday Inquirer, and 7.6 percent for the Daily News, which dropped below 100,000. The industry average was 7.1 percent for daily newspapers.