Not the newspaper’s current owner, and not the employees.
Former employees of the Daytona Beach News-Journal have asked a judge to freeze the sale of the paper until the company’s pension deficit is straightened out. They join the paper’s local owners in protesting the pending sale, at $20 milllion, to Halifax Media Acquisition, an Arkansas-based company.
The newspaper’s pension plan is currently short by $14.37 million, and currently, the paper had proposed to review the pension deficit after the sale was completed.
That’s “too close for comfort,” reports the News-Journal. They fear there will be little incentive for the company to back the pensions once the sale is completed.”
That was Thursday. A day earlier, the paper’s current owners, PMV Inc., also filed opposition in court asking the judge to block the sale of the paper, saying the price was too low.
The same judge valued the paper at $272 million in 2006; PMV is arguing that the economy is too poor and not enough bids were considered to properly and accurately value the paper now.
This legal battle began in 2004, when Cox Enterprises, a minority shareholder, sued the paper for pledging $13 million for naming rights to an arts center. The News-Journal offered to buy Cox’s share, then found out it couldn’t afford the $129 million it was worth. The whole paper was then put on the market.
We have the pension-related filing after the jump.
Case 6:04-cv-00698-JA-DAB Document 586 Filed 01/19/10 Page 1 of 6
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
COX ENTERPRISES, INC.,
a Delaware Corporation,
CASE NO.: 6:04-CV-698-28-KRS
a Florida corporation, et al.,
KATHY COUGHLIN, et al.,
OBJECTIONS TO PROPOSED SALE OF THE PUBLISHING OPERATIONS OF
THE NEWS-JOURNAL CORPORATION AND SUPPORTING MEMORANDUM
OF LAW ON BEHALF OF PENSION-INTERVENORS THOMAS S. BROWN,
EMERY M. JEFFREYS, SUZANNE D. KRIDNER, LAURA STEWART, BRUCE
J. KUEHN, ANDREW E. MIKULA, AND KENNETH R. HORNACK
Through undersigned counsel, PENSION-INTERVENORS THOMAS S. BROWN,
EMERY M. JEFFREYS, SUZANNE KRIDNER, LAURA STEWART, BRUCE J. KUEHN,
ANDREW E. MIKULA, AND KENNETH R. HORNACK hereby file these limited,
protective objections to the Joint Motion of Receiver and Cox Enterprises, Inc. for Hearing
and Approval of and Direction to Complete Sale of Publishing Operations (Doc. 576),and
state as follows:
Page 1 of 6
Case 6:04-cv-00698-JA-DAB Document 586 Filed 01/19/10 Page 2 of 6
1. The proposed sale of the publishing assets of the News-Journal Corporation is a
sale of substantially all of the assets of the NJC.
2. The proposed purchase price of the sale of the publishing assets is $20.074
3. The NJC pension plan has an accumulated funding deficiency of $14.37 million
as of 09/30/2009; the pension liability is not being assumed by the purchasers. (See, Doc.
576-2, p. 72; Doc. 576-9, p. 32). See also, page 14, para. 29 of the proposed Order attached
to the Motion (Doc. 576-11), the under-funding of the NJC Pension Plan is specifically
excluded from any liability of the Buyer.
4. The current value of assets in the pension plan is insufficient to cover all accrued
benefits and other liabilities of the pension plan.
5. The responsibilities, obligations and duties imposed by ERISA have been
breached with respect to the Plan, specifically as follows:
(1) Minimum funding requirements have not been met under Section 302 of
ERISA in respect to the Plan.;
(2) An accumulated funding deficiency exists;
(3) Receiver has failed to give the Pension Benefit Guaranty Corporation at
least thirty (30) days prior notice of the sale, which is a reportable event, as required by
Â§4043(b) of ERISA (29 U.S.C. Â§1343), nor has PBGC provided Receiver with a waiver of
Page 2 of 6
Case 6:04-cv-00698-JA-DAB Document 586 Filed 01/19/10 Page 3 of 6
(4) Receiver improperly attempts to divest PBGC of its statutory right of to
assert any claim against the NJC on behalf of Plan participants by also failing to give
sufficient notice prior to the distribution of the proceeds. In the proposed Order, the
Receiver is allowed to provide only 14 days notice period for any claims to be made against
the proceeds of the sale. Since the sale of publishing assets is a distressed sale of
substantially all of the assets of the NJC and the sale is being done through a receivership,
this sale is essentially a liquidation, requiring a thirty day advance notice period to the
PBGC. 29 U.S.C. Â§1343(c)(10).
(5) It is unclear as to the Receiverâ€™s intentions regarding payment of the either
the accumulated funding deficiency or termination premiums to PBGC, as required under
29 U.S.C. Â§1306(a)(7)(A), since the proposed Order provides that all retained liabilities will
â€œattach to the proceeds if the Sale in the order of their priority with the same validity, force
and effect which they now have as against the Transferred Assets.â€ (Doc. 576-11, p. 10,
para. 15). Moreover, the Receiver issued an internal memorandum on the day the Motion
to Approve Sale was filed, stating in relevant part:
The sale of the business will not resolve all open issues. Once the company
sells and the money’s in the bank, we will begin to pull together another
recommendation to the judge to distribute the money from the sale among
Cox and other potential creditors. At that time we will bring the Pension
Benefit Guarantee Corporation (PBGC) to the table to make a final
determination on how the pension plan will be wrapped up. The sale motion
1/Receiver asserts that he served notice to PBGC of its eleven (11) days notice to file
objections. (Doc. 76, pp. 6-7).
Page 3 of 6
Case 6:04-cv-00698-JA-DAB Document 586 Filed 01/19/10 Page 4 of 6
submitted today does not deal with pension matters.
(Attached as Exhibit A). From the Receiverâ€™s email, his plan is to not involve the PBGC
until after it has distributed the sale proceeds. That timing would be detrimental to the
Pension Plan, its participants, and to the government which may then have to fund the
Pension Plan without being able to avail itself of the funds that should rightly be provided
by the Receiver to appropriately fund the NJC Pension Plan.
Due to the lack of proper notice and the overly broad language in the proposed Order,
the Motion and proposed Order could improperly result in releasing the Receiver, NJC, Cox
and all other Persons from any liability as to any party who fails to object within the initial
11 day objection period and others who then fail to file a claim within the later 14 day claim
period, which by definition of the terms of the Motion and proposed Order, would include
extinguishing any pension liability or claims by PBGC.
To avoid any confusion over whether the Courtâ€™s Order specifically seeks to divest
the PBGC from its statutory authority to seek to collect all unfunded liabilities or to obtain
termination premiums or to otherwise protect the NJC Pension Plan participants, the Order
should be modified to provide for at least thirty days advance notice to PBGC of the sale,
another thirty days notice post-sale to file any claims.
Moreover, the Order should provide that any liabilities relating to the pension plan,
including claims that may be asserted by the PBGC, are not subject to the broad release
provisions in the Order. Additionally, the Court should secure all of the sale proceeds
against any payment until the PBGC has had the proper opportunity to protect the rights of
Page 4 of 6
Case 6:04-cv-00698-JA-DAB Document 586 Filed 01/19/10 Page 5 of 6
the NJC Pension Plan participants. The Pernsion Intervenors propose language to the effect
Notwithstanding anything in this Order, no Person shall be discharged,
released or relieved from any liability with respect to the Pension Pan, nor
shall the PGBC, the Pension Plan or any other Person be enjoined or
precluded from enforcing any liability with respect to the Pension Plan as a
result of this lawsuit, the provisions of the Asset Purchase Agreement, or the
confirmation of the APA. No distribution of the Sale Proceeds or from the
sale of any other NJC assets shall be allowed until such time as the PBGC
has resolved all of any claims it may have made regarding the Pension Plan
The Pension-Intervenors reserve the right to object to any other new or revised terms of the
/s/ Martha A. Chapman
Martha A. Chapman
Florida Bar No. 0004464
MARTHA A. CHAPMAN, P.A.
912 Highland Ave.
Orlando, FL 32803
COUNSEL FOR PENSION-INTERVENORS
BROWN, JEFFREYS, KRIDNER, STEWART,
KUEHN, MIKULA, AND HORNACK
CERTIFICATE OF SERVICE
Page 5 of 6
Case 6:04-cv-00698-JA-DAB Document 586 Filed 01/19/10 Page 6 of 6
I HEREBY CERTIFY that I electronically transmitted this document to the Clerk of Court
using the ECF system, which will transmit a Notice of Electronic Filing to Counsel of each
of the other represented parties, each of whom is an ECF registrant, and by mail on this the
19th day of January, 2010, to the pro se parties on the service list below.
/s/ Martha A. Chapman
Martha A. Chapman
Florida Bar No. 0004464
MAIL SERVICE LIST FOR PRO SE INTERVENORS:
Ellen Andrews Thomas M. Lindley
80 Big Buck Trail 789 Falcon Drive
Ormond Beach, FL 32174 Port Orange, FL 32127
Stephen M. Blais Leonard A. Marsh
4168 Grand Ave. 33 Winding Creek Way
Deland, FL 32720 Ormond Beach, FL 32174
Gary E. Flatt, Sr Laurence S. Saffer
833 Narcissus St. 3333 South Atlantic Ave. # 1804
Holly Hill, FL 32117 Daytona Beach Shores, FL 32118
Lori Gamboa Rex D. Smith
5862 Cypress Estates Drive 2240 Brian Avenue
Elkton, FL 32033 South Daytona, FL 32119
Dennis F. Kozak Susan Wright
27 Spinnaker Cir. 834 E. River Oak Dr.
South Daytona, FL 32119 Ormond Beach, FL 32174
2061 Taylor Rd
Port Orange, FL 32128
Page 6 of 6
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