The Associated Press

TAMPA, Fla. (AP) - A New York hedge fund snapped up the Creative Loafing newspaper chain during a bankruptcy auction Tuesday and promised to keep its six free alternative weeklies running as normal.

Atalaya Capital Management bid $5 million for the alt-weeklies in Atlanta, Chicago, Washington, D.C., Charlotte, N.C., and Sarasota and Tampa, Fla.

Creative Loafing's longtime owners - the Eason family - had opened the bidding by offering $2.32 million. Ben Eason was effectively removed as chief of the chain Tuesday, and says he will start a new online publication in Tampa later this week.

"I've started three newspapers in my time," Eason told the St. Petersburg Times as the two-hour action ended. "I'll start afourth."

Judge Caryl Delano said Atalaya's $5 million would satisfy the company's debts.

Creative Loafing got into debt trouble when it borrowed roughly $40 million in 2007 to buy Washington City Paper and the Chicago Reader. When the economy plummeted, Creative Loafing's advertising and other revenues did, too. The company filed for Chapter 11 bankruptcy protection in Tampa in September.

In a story about the sale posted Tuesday on Creative Loafing's Web site, the company said Atalaya doesn't intend to close any of the newspapers. Instead, the hedge fund has plans to invest in them, and has indicated that Creative Loafing's new board will include journalists such as ex-Los Angeles Times editor Jim O'Shea.