Workers, beneficiaries have retirement savings restored
WASHINGTON–(ENEWSPF)–February 23, 2012. The U.S. Department of Labor’s Employee Benefits Security Administration has announced that the Tribune Co., GreatBanc Trust Co. and various insurance carriers have completed funding of a global settlement in the amount of $32 million to be allocated among the Tribune Employee Stock Ownership Plan’s participants, and to pay for legal and administrative expenses. The settlement is with, among others, the department and the plaintiffs in a private class action lawsuit, and resolves the department’s claims of violations of the Employee Retirement Income Security Act.
“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. “I am pleased that participants’ hard earned retirement savings have been returned.”
“The fulfillment of this settlement is good news for participants in the Tribune Employee Stock Ownership Plan,” said Phyllis C. Borzi, assistant secretary of labor for employee benefits security. “It is the culmination of my agency’s commitment and extreme hard work in this case to ensure that the employees’ contributions to the plan are handled with the utmost of care according to the law and according to what is right.”
On Jan. 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. In accordance with the global settlement agreement, the department has concluded its investigation of the plan.
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.
As part of its 2007 corporate re-structuring, 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 Dec. 31, 2010, the Tribune ESOP had 13,020 participants. The settlement amount has been deposited into an independently managed settlement account.
The Chicago Regional Office of the Employee Benefits Security Administration conducted the investigation into the Tribune ESOP. Employers and workers can contact that office at 312-353-0900 or toll-free at 866-444-3272 for assistance with problems related to private sector pension and health plans.