By RANDALL CHASE, AP Business Writer
WILMINGTON, Del. (AP) — A bankruptcy judge on Wednesday approved a multimillion-dollar bonus plan for hundreds of Tribune Co. employees after the company agreed to exclude five top executives.
The bonus plan originally called for paying 640 employees bonuses ranging from $16.5 million to $42.9 million for this year, providing the company meet certain cash flow targets.
A government trustee monitoring the case and Tribune’s official committee of junior creditors objected to the proposal because it would have handed bonuses to five executives who played a role in the leveraged buyout that took Tribune private in 2007. The committee has named the five as defendants in a lawsuit seeking damages related to the deal.
The debt Tribune took on during the buyout helped land the company, in Chapter 11 in December 2008 as the newspaper industry foundered against the recession and competition on the Web. Tribune owns the Chicago Tribune and Los Angeles Times along with other newspapers and several broadcast stations.
And this summer, an independent investigator in the bankruptcy case found that some aspects of the deal may have amounted to fraud.
At the start of a hearing Wednesday, attorneys for Tribune agreed to remove the five executives in question, including Chief Financial Officer Chandler Bigelow, from the bonus plan.
Without admitting that the executives did anything wrong, Tribune attorney Brian Gold said the other 635 people covered under the bonus plan are “extraordinarily important” to the company and deserve the court’s consideration.
Judge Kevin Carey told Gold that the decision to remove the executives from the plan was wise. “I would have sustained those objections anyway,” the judge said.
After Tribune cut out the five executives, attorneys for the creditors committee and the U.S. trustee said their concerns had been satisfied, and Carey approved the bonus plan.
Without the five executives that have been excluded, the bonuses could still amount to more than $40 million.
In the meantime, Tribune is trying to win approval for its latest reorganization plan, which would allow it to exit Chapter 11 after nearly two years in court.
It has already won over some important factions, including creditors JPMorgan Chase & Co., distressed debt specialist Angelo, Gordon & Co. and hedge fund Oaktree Capital Management, who would assume ownership of the company. The committee of junior lenders has signed on as well.
Various other creditor groups are still raising objections, however. And three have filed competing plans for retooling the company.
(TM and © Copyright 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)