The 43-page decision was a victory for George E. Norcross III, the co-owner who sought a private auction where bids would rise by $1 million every five minutes until all but one party dropped out.
He could not be reached for comment but his spokesman Dan Fee said: "We are pleased that Vice Chancellor Parsons has agreed that the best way to end the IGM partnership is through a members-only sale process."
Co-owners Lewis Katz and H.F. "Gerry" Lenfest had argued for a public auction with single sealed bids. Reached by phone Friday, Lenfest said there were no plans to appeal the decision, and said he would join Katz in the bidding.
"I think it's fine," Lenfest said. "We preferred the sealed bid, but whatever the court wants is fine."
Katz could not be reached for comment.
Norcross and Katz each had pledged in testimony to bid at least $77 million for the company, depending on the auction format.
Katz, Lenfest, and their attorneys argued that opening the auction to qualified bidders would increase the price ultimately paid for the company.
That argument was hurt this week when the Newspaper Guild - the largest employee union at IGM - said that neither of its two potential partners would pay $77 million for the company. In his ruling, Parsons noted that with one exception, no newspaper company nationwide has sold for that much in the last six years.
Norcross sought the dissolution and English-style auction in Delaware through his company, General American Holdings Inc., and Katz responded through his limited partnership, Intertrust GCN.
"General American and Intertrust are both backed by exceptionally successful and astute businessmen," Parsons wrote. "Each of them is familiar with IGM's business and neither has any discernible advantage in an English-style auction such that the court should consider and attempt to dampen that advantage."
Attorneys for both sides had agreed by Thursday that former Vice Chancellor William B. Chandler III would act as the liquidating trustee for the auction.
Norcross' lead attorney, Robert Heim, said: "The judge rendered a thoughtful decision based on the evidence and of course we're pleased."
Asked about the possibility of a negotiated settlement, Heim said the ruling could "encourage the two principal owners to talk" but that he was unaware of such plans.
Norcross and Katz make up the two-man management committee that is supposed to make all major decisions for IGM, which also owns the Philadelphia Daily News, three websites and a printing plant.
The rival owners have been battling over the fate of the company since last fall and because of that, agreed that dissolving IGM was necessary.
Their dispute became public in October when publisher Robert J. Hall fired Inquirer editor William K. Marimow at the behest of Norcross and over Katz's objection.
Katz and Lenfest sued in Philadelphia to have Marimow reinstated and Hall dismissed. A Philadelphia judge reinstated Marimow and left Hall in his position.
Marimow's contract is to expire Wednesday. Lenfest said the parties had agreed to let Marimow stay through May 14 and perhaps beyond, pending further discussions. Heim declined to comment on Marimow.
Inquirer staff writer Thomas Fitzgerald contributed to this article.