The latest development in the increasingly high-stakes war between the independent San Francisco Bay Guardian and the Village Voice Media-owned SF Weekly?

According to court filings just shared with The Stranger, today VVM, which also owns the Seattle Weekly and 12 other alt-weeklies around the country, told a San Francisco court that it's been declared in default on an $80 million loan it has from the Bank of Montreal.

The news of this default (which VVM learned of on March 12) comes about a week after a San Francisco court awarded the Bay Guardian half of the SF Weekly's ad revenue each month as a means of paying down a $21 million judgment the Bay Guardian won against the SF Weekly in 2008 for "predatory pricing" of ad space.

In today's filings, SF Weekly says that its advertisers are now getting conflicting letters—one from the Bay Guardian saying it's going to be taking some of SF Weekly's ad revenue from now on, and one from the Bank of Montreal saying that it, in fact, is the one that's owed the money first.

Randall S. Farrimond, attorney for the SF Weekly, has asked the court for a temporary restraining order to prevent the Bay Guardian from sending any more letters to its advertisers at the same time as VVM's "senior lien holder," Bank of Montreal, does. In his request, Farrimond wrote:

The confusion created by the Bay Guardian Notice is causing advertisers to withhold all payment, to threaten to pull [their] advertising out of SF Weekly, and, if Bay Guardian is permitted to continue this tactic, is likely to devastate SF Weekly’s advertising business beyond repair... No advertiser or potential advertiser will tolerate for long the burden of navigating confusing and contradictory legal notices in order to pay a simple invoice.

He further described the current situation as "havoc."

UPDATE: Over at The Snitch, VVM executive associate editor Andy Van De Voorde says that Bank of Montreal has also filed suit in Delaware to block the Bay Guardian's collections efforts.

In an affidavit filed in Delaware, BMO vice president Thomas E. McGraw makes it clear that the bank's intention is to keep the [SF] Weekly healthy—and to keep doing business with its longtime client, despite the formal declaration of a default made necessary by the Guardian's actions.

"BMO reserves its rights to make certain funds available to SF Weekly to pay business expenses in order to allow it to sustain operations and generate further and greater revenues to assist in paying down the debt to the lenders," the affidavit says.

FURTHER UPDATE: Jay Adkisson, the Bay Guardian's collections attorney, tells me the court has rejected Farrimond's request for a restraining order and ruled that, pending future hearings, SF Weekly ad revenue will be forwarded to a neutral bank account.