Feb 24, 2012
--- The Tribune Co., GreatBanc Trust Co. and various
insurance carriers completed funding a global settlement of $32 million for the
Tribune Employee Stock Ownership Plan’s participants. ---
According
to the U.S. Department of Labor’s Employee Benefits Security Administration
(EBSA), the settlement resolves the department’s claims of violations of the
Employee Retirement Income Security Act. (ERISA).
On
January 30, 2012, the U.S. District Court for the Northern District of Illinois
approved the global settlement agreement, which had received prior approval in
October 2011 by the U.S. Bankruptcy Court for the District of Delaware.
EBSA
initiated an investigation of the plan to review its 2007 purchase of Tribune
Co. stock for $250 million and the roles played by the plan’s fiduciaries, the
company and the plan’s trustee, GreatBanc Trust Co. The department claimed that
the company failed to act prudently and in participants’ best interests when it
engaged in the ESOP transaction. Additionally, the department claimed that
the ESOP transaction was prohibited, a claim consistent with the findings of
the district court in the private plaintiffs’ action. (see “Judge Approves
Class in Tribune ESOP Suit”).
As
part of its 2007 corporate restructuring, the Tribune Co. became a
privately held entity owned by the plan. In September 2008, a class-action
lawsuit was filed on behalf of the plan’s participants. While initially filed
in California, the case was moved to the Northern District of Illinois in
November 2008. In December 2008, the Tribune Co. and some of its subsidiaries
filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The
department filed claims in the company’s bankruptcy proceedings and objected to
confirmation of plans to reorganize it. These matters were resolved as part of
the global settlement agreement.
As
of December 31, 2010, the Tribune ESOP had 13,020 participants. The settlement
amount has been deposited into an independently managed settlement
account.
“This
settlement ensures that the Tribune Employee Stock Ownership Plan’s
participants and beneficiaries will be able to receive the benefits that are
rightfully theirs,” said Secretary of Labor Hilda L. Solis.
Tara Cantore