Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.
Compliance February 24, 2012
Tribune Workers Have Retirement Savings Restored
The Tribune Co., GreatBanc Trust Co. and various
insurance carriers completed funding a global settlement of $32 million for the
Tribune Employee Stock Ownership Plan’s participants.
Reported by Tara Cantore
According to the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the settlement resolves the department’s claims of violations of the Employee Retirement Income Security Act. (ERISA).
On January 30, 2012, the U.S. District Court for the Northern District of Illinois approved the global settlement agreement, which had received prior approval in October 2011 by the U.S. Bankruptcy Court for the District of Delaware.
EBSA initiated an investigation of the plan to review its 2007 purchase of Tribune Co. stock for $250 million and the roles played by the plan’s fiduciaries, the company and the plan’s trustee, GreatBanc Trust Co. The department claimed that the company failed to act prudently and in participants’ best interests when it engaged in the ESOP transaction. Additionally, the department claimed that the ESOP transaction was prohibited, a claim consistent with the findings of the district court in the private plaintiffs’ action. (see “Judge Approves Class in Tribune ESOP Suit”).
As part of its 2007 corporate restructuring, the Tribune Co. became a privately held entity owned by the plan. In September 2008, a class-action lawsuit was filed on behalf of the plan’s participants. While initially filed in California, the case was moved to the Northern District of Illinois in November 2008. In December 2008, the Tribune Co. and some of its subsidiaries filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The department filed claims in the company’s bankruptcy proceedings and objected to confirmation of plans to reorganize it. These matters were resolved as part of the global settlement agreement.
As of December 31, 2010, the Tribune ESOP had 13,020 participants. The settlement amount has been deposited into an independently managed settlement account.
“This settlement ensures that the Tribune Employee Stock Ownership Plan’s participants and beneficiaries will be able to receive the benefits that are rightfully theirs,” said Secretary of Labor Hilda L. Solis.