Excerpt: $180 Million Is Not Chump Change

  • For instance David Hiller, CEO of the Los Angeles Times before he left the company in July of 2008, got $3,972,558 in a deferred bonus, $2,328,067 for his stock, $2,083,333 in phantom equity, a total of $3,050,523 in excise tax gross ups, and $3,960,000 in executive transition. That comes to nearly $15.4 million. Then again, it’s a trifle compared to what Dennis FitzSimons, CEO of the entire company, walked away with — $28.7 million.
  • Only if you are afflicted with schadenfreude — that is, if you yield to the temptation to take pleasure in the troubles of others — will you be pleased to know that every penny of that $180 million is now in jeopardy. The Tribune Company has been mired in bankruptcy court since December 2008, and earlier this month a faction calling itself the Official Committee of Unsecured Creditors filed a series of individual complaints against all 209 managers who shared in that pot.
  • To keep either creditors or insiders from getting their money out while the getting’s good — at the likely expense of everyone else — the U.S. Bankruptcy Code allows a trustee overseeing a bankrupt company to recover payments made even before the corporation files for bankruptcy.
  • The Code says the trustee can act if the payment was made “on or within 90 days before the date of the filing of the [bankruptcy] petition.” However, that window expands from 90 days to an entire year “if such creditor at the time of such transfer [of funds] was an insider.”
  • Those creditors who claim the buyout was a “fraudulent conveyance” — that is, could not possibly have succeeded — are supported by the logic of the Bankruptcy Code.

Source: Chicago Reader