Former and current L.A. Times employees suing Tribune's embattled chief Sam Zell scored another victory in court Tuesday.
In other Tribune news:
No Bonus Checks For 5 Tribune Execs Being Sued Over Bankruptcy
From FishbowlLA: Today a bankruptcy judge gave the green light on a multimillion-dollar bonus plan for over 600 Tribune Co. managers — but only after the company removed the names of five employees currently being sued from the list. Harry Amsden, Chandler Bigelow, Robert Gremillion, Daniel G. Kazan, and David D. Williams are top Tribune executives who are defendants in a lawsuit filed by creditors due to their roles in the company’s 2007 leveraged buyout.
From RadioInfo.com: Tribune's original 2010 incentive plan for the brass elicited howls from creditors and also workers at Tribune newspapers and TV stations, who moved to block them. Any of you kids remember the days when journalists got bonuses? Anyone?
From Bloomberg: Brian J. Gold, a Tribune attorney, today disclosed the decision to deny the payments to the executives after objections were lodged by creditors and the Office of the U.S. Trustee, an arm of the Justice Department that monitors bankruptcies.
“I would have sustained those objections for reasons that are obvious,” Judge Kevin J. Carey said. “It is wise that the debtor came to that decision.”
The new plan spreads out the bonuses to 640 people and caps the total payout at no more than $42.9 million - partly for sticking around, during a very difficult period in Chapter 11 re-organization.
From the Wall Street Journal: Tribune has denied allegations that Mr. Bigelow and others allowed the use of incorrect financial projections to obtain a solvency opinion that was essential to the closing of the 2007 leveraged buyout. However, the company withdrew its chief financial officer and four other executives from a 2010 bonus package that was up for court review Wednesday, so as not to jeopardize bonus payments for the other employees.
Creditors and federal bankruptcy watchdogs had protested the plan to pay bonuses to Mr. Bigelow and the four other excluded executives, all of whom were named defendants in a creditor lawsuit against company leaders who played key roles in the LBO. The creditors and bankruptcy watchdogs objected, asking that the five executives who have been sued be left out of the bonus pool.
The creditor lawsuit grew out of the work of court-appointed investigator Kenneth Klee, who examined the LBO. He found evidence that Mr. Bigelow and other top financial executives "were not honest or candid" as they pushed to get the deal across. Others dropped from the bonus list Wednesday were suspected of wrongdoing because they allegedly pledged assets of operating subsidiaries to guarantee the LBO debt, without checking into the deal.
A year after the LBO added more than $8 billion to Tribune's debt load, the company filed for bankruptcy-court protection.
Court documents put Tribune's value at $6.75 billion. Its debts top $12 billion.
"We're doing terrific," said Eddy Hartenstein, publisher of the Los Angeles Times, a Tribune newspaper. Mr. Hartenstein recently was named to Tribune's new four-person executive council after former Chief Executive Randy Michaels resigned last month amid unflattering reports about the company's corporate culture.
Mr. Hartenstein took the witness stand Wednesday to testify that Tribune's operations are doing well and its bonuses are justified, in spite of continuing strife in the bankruptcy-court case, which is approaching its two-year anniversary.
Tribune lost the sole right to control the outcome of its Chapter 11 proceeding months ago, and faces competition on three fronts. The company's original plan would have quieted all questions about the LBO, in exchange for concessions of value from lenders that financed the LBO.
Company leaders would have been shielded from lawsuits under the previous Chapter 11 plan. Findings from Mr. Klee, of Klee Tuchin Bogdanoff & Stern, forced Tribune to revise its plan and agree to one that means legal jeopardy for some existing executives and former leaders.