Teamsters’ pension fight stalls bankruptcy sale of Philadelphia Inquirer, Daily News

Pension fight stalls sale of Philly newspapers

PHILADELPHIA — The bankruptcy sale of Philadelphia’s two major newspapers has been delayed two weeks as creditors poised to take over try to hammer out labor contracts with several Teamsters units.

Creditors won the April bankruptcy auction for The Philadelphia Inquirer and Philadelphia Daily News with a $139 million bid, but the sale hinges on them getting signed labor contracts.

The unionized drivers and machinists are mostly balking at giving up new company contributions to their defined pension plans. The creditors want to steer the money to individual 401(k) plans.

“There is absolutely no buyer — no buyer — for the company … with a defined pension plan,” lawyer Fred Hodara, who represents the creditors, said Tuesday after a brief court session.

Reporters and photographers who had previously given up their pension plan voted last week to accept furloughs and wage cuts that amount to a 6 percent pay cut. In exchange, the creditors pledged to avoid layoffs for at least a year. The newsrooms, like many around the country, have gone through several rounds of layoffs and buyouts in recent years as the industry struggled with declining revenue.

The new owners are a consortium of banks and hedge funds — led by Angelo Gordon & Co., Alden Global Capital and others — operating under the name Philadelphia Media Network.

They now have until Sept. 14 to negotiate with the holdout unions and close the sale. Five of 15 bargaining units remain unsigned, lawyers said Tuesday.

“The pensions are a big problem,” said lawyer Claiborne S. Newlin, who represents press operators who overwhelmingly rejected the contract offer. “The unions with the economically viable pensions certainly want to keep them.”

The creditors would take over the company from local investors who borrowed heavily to buy it for $515 million in 2006. That group was led by public relations executive Brian Tierney and luxury home builder Bruce Toll. Tierney ran the newspapers for four years, then clashed mightily with creditors as he struggled to hold onto them during the bitterly fought bankruptcy.

On Tuesday, lawyers for the buyers, sellers, unions and pension funds spent several hours in closed-door meetings with Chief U.S. District Judge Stephen Raslavich, who has been pressing them to end the 18-month case.

Although the Tuesday deadline he had set came and went, the judge remained optimistic the new owners could reach the finish line.

Raslavich agreed to the delay, he said, “rather than see the transaction fail, and leave us then to confront a range of alternative scenarios for the resolution of this case, none of which I believe is especially attractive.”