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Thursday, May 23, 2024 | Back issues
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Tribune Can Pay $42M|in Bonuses, Judge Rules

WILMINGTON, Del. (CN) - Tribune Co. can pay its employees and executives more than $42 million in bonuses for 2010, a federal bankruptcy judge ruled Wednesday.

U.S. Bankruptcy Judge Kevin Carey allowed the troubled owner of the Chicago Tribune and other media outlets to go through with its plan to pay 635 employees, five less than what the original plan sought.

The committee of unsecured creditors objected to five top executives of Tribune receiving their bonuses because they are named 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 the Tribune's leveraged buyout in 2007.

Former Tribune CEO Randy Michaels was not included as one of the five exempt executives, and the fate of his 2010 bonus is still up in the air.

This recent approval of bonuses adds to the $57 million already granted by Judge Carey since Tribune filed for bankruptcy in December 2008.

In the hearing, Carey called the bonuses "meaningful but not excessive."

On a related note, the official committee of unsecured creditors filed a motion Thursday seeking recovery of more than $250 million in payments made by Tribune the year before the company filed for bankruptcy. Calling them the "preference defendants," the motion 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 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, the motion states.

Tribune filed for bankruptcy in 2008, one year after the $8.2 billion leveraged buyout of the company.

The motion was filed by J. Landon Ellis of Landis, Rath & Cobb LLP and Howard Seife with Chadbourne & Parke LLP.

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