Disgruntled Tribune Company employees are one step closer to receiving a $32 million settlement for the company’s misguided employee stock ownership plan (ESOP).
Rebecca Pallmeyer, a federal district court judge in Illinois, granted preliminary approval of the settlement of a class action case brought about by former Los Angeles Times auto writer Dan Neil and other Tribune employees.
Tribune and its employees reached the settlement back in August, and informed the judge of that.
Now that the judge has approved it, notices go out to all potential beneficiaries. There is then a hearing, slated for Jan. 30, when any of the employees can object because they feel they are not getting enough money.
The settlement was made with GreatBanc Trust, the trustee for Tribune Company's employee stock ownership plan.
It is the coda to a recklessly inventive plan dreamed up by former Tribune boss Sam Zell that placed all the risk for buying the Tribune Company on the employees, while sharing ownership with the billionaire. (Technically, Zell was not an "owner" of the company at the time of the deal; under the plan, he held a warrant to take 40 percent ownership in exchange for his $315 million investment.)
The plan created an employee stock ownership plan (ESOP) for the tax benefits it offered — and pushed Tribune's debt to $12.5 billion.
Zell took the company private by investing alongside the ESOP, incurring the billions of dollars in debt and requiring the company to produce wildly optimistic revenue at a time of ongoing financial decline.