WILMINGTON, Del. (CN) – Tribune Co. can pay its employees and executives more than $42 million in bonuses for 2010, a bankruptcy judge ruled. The bonuses are in addition to the $57 million already granted by Judge Kevin Carey since Tribune filed for bankruptcy in December 2008. In a Wednesday hearing, Carey called the bonuses “meaningful but not excessive.”
Judge Carey allowed the troubled owner of the Chicago Tribune, the Los Angeles Times and other media outlets to go through with its plan to pay bonuses to 635 employees, five fewer than sought by the original plan.
The committee of unsecured creditors objected to five top executives of Tribune receiving bonuses because they are defendants in a lawsuit filed last week in U.S. Bankruptcy Court in Delaware.
That lawsuit was filed after an independent examiner appointed by the court found possible wrongdoing related to Tribune’s leveraged buyout in 2007.
Former Tribune CEO Randy Michaels was not included as one of the five exempted executives; the fate of his 2010 bonus is still up in the air.
In separate but related action, the official committee of unsecured creditors filed a motion on Thursday seeking recovery of more than $250 million in payments made by Tribune the year before it filed for bankruptcy.
Calling them the “Preference Defendants” in the motion, the committee names former and likely future owners of Tribune, including Samuel Zell, JPMorgan Chase and EGI-TRB LLC, the company Zell used to take over Tribune. According to the motion, Tribune has agreed that the Committee should pursue the actions on behalf of the estate due to certain inherent conflicts that the committee calls “self-evident.” Part of the so-called “Preference Actions” relate to payments made to Tribune insiders in 2007 in the form of bonuses, restricted stocks and other awards, according to the motion.
Tribune filed for bankruptcy in 2008, 1 year after the $8.2 leveraged buyout of the company.
The motion was filed by J. Landon Ellis with Landis, Rath & Cobb and Howard Seife with Chadbourne & Parke.