Trustee, Bank Object To Tribune Management Incentive Plan
June 11, 2010 at 4:30 AM (PT)
The U.S. Trustee and Bridge Agent WELLS FARGO BANK, N.A. have filed objections to TRIBUNE CO.'s 2010 management incentive plan.
Trustee ROBERTA A. DEANGELIS filed her preliminary objection with U.S. Bankruptcy Court THURSDAY, saying that "If this Court approves the Motion, the Debtors will have been authorized to pay more than $100 million in cash bonuses to their management during these cases. While the Debtors argue for 'shared sacrifice' in addressing collective bargaining issues with their unions, the Debtors fail to understand what that concept means when it comes to compensating their management. The Debtors themselves have proposed a reorganization plan which promises nothing or next-to-nothing for various classes of TRIBUNE creditors. Now is not the time for yet another round of bonuses."
DEANGELIS is asking that the hearing on TRIBUNE's motion on the plan should be continued to the hearing date for confirmation of the reorganization plan, and charges that in its motion, TRIBUNE did not adequately explain why the proposed plan is not a "retention plan" proscribed by law and that "the Motion seeks approval of an out-of-the-ordinary-course bonus plan that is not justified at this juncture of the cases."
WELLS FARGO complains in its motion that TRIBUNE is taking almost $43 million of cash to pay insiders while the Bridge Lenders would only get less than one-half of one percent recovery on their claims if they accept the plan, and will not get payment in full whether or not they reject the plan. Like the Trustee, WELLS FARGO also told the court that "there is no reason to consider the request apart from or prior to conformation."