The never-ending Tribune Company Chapter 11 proceeding goes on, but the company has resolved one lawsuit. It has settled with former employees who had claimed that the 2007 leveraged buyout led by Sam Zell violated federal pension law.
The former employees had sued the trustee for the Tribune Company’s employee stock ownership plan (ESOP), GreatBanc Trust. Zell had used the ESOP for the buyout because of its tax advantages. In addition to setline the lawsuit, the deal that’s been cut also resolves objections by GreenBanc and the US Department of Labor to the proposed Chapter 11 reorganization plan.
The proposed agreement resolves the lawsuit as a non-opt-out class action settlement for a payment of $32 million for the benefit of ESOP participants and to cover expenses. The payment will be funded by insurers in the amount of $26.4 million, Tribune in the amount of $4.45 million, and GreatBanc Trust in the amount of $1 million. According to the flagship Chicago Tribune, about 13,000 current and former Tribune Co. employees will share in the settlement.
The company announcement noted that under the terms of the agreement, “there has been no finding of fault on the part of Tribune, nor any admission of wrongdoing or liability by the company or its officers, directors or employees.”
The multi-party agreement must be approved by the United States Bankruptcy Court for the District of Delaware and by the United States District Court for the Northern District of Illinois.
“We are pleased to resolve the Department of Labor’s objections to the pending plans of reorganization for Tribune as part of GreatBanc’s settlement of the litigation,” said Don Liebentritt, Tribune chief restructuring officer. “This is a good result for all parties and ensures a smoother exit from bankruptcy once we have a confirmed plan.”