Bankruptcy Judge Stephen Raslvich denied a request by union leaders to delay the bankruptcy reorganization of The Inquirer and the Philadelphia Daily News pending an appeal brought by the company’s pension plans to the U.S. District Court. Unions representing the pension plans have argued that they are owed $174 million in unfunded liabilities which is more than the company’s sale price. They have also warned that they are at risk of becoming insolvent in the future if the new owners of the media company are allowed to avoid any responsibility for the pension funds. However the bankruptcy court was not swayed by the union leaders’ arguments.
Raslavich said the pension plans, led by the Teamsters Union fund and including other employee funds, had failed to make a strong case that they would suffer irreparable harm if the reorganization were completed. He said the company faced a more immediate threat of insolvency if the 17-month-old bankruptcy case were not concluded by September.
The bankruptcy judge confirmed the bankruptcy reorganization plan of the media company. The plan provides that Philadelphia Newspapers L.L.C., which owns The Inquirer, the Daily News, and Philly.com, will be sold for $139 million to 16 financial institutions that were among its senior lenders. Furthermore, the bankruptcy judge argued that if the reorganization plan was not approved, the company would have been almost guaranteed to become insolvent.
But in better news for the company’s current employees, the Newspaper Guild, which represents journalists, advertising, and circulation staff, have reached a tentative deal with the bankrupt company that will include a 2 percent across-the-board pay cut and 10 unpaid furlough days per year over a period of three years. The union said that the bankruptcy deal would help the company avoid permanent cuts and save about $6 million in 2011 expenses.