Severance Payments Denied At Tribune; Bonuses Approved

[Robbien]

Source: WSJ

A federal bankruptcy judge denied authorization for Tribune Co. to make more than $2 million in severance payments to more than 60 employees laid off shortly before the media company filed for bankruptcy protection in December.

The judge also ruled, however, that Tribune can pay more than $13 million in bonuses to almost 700 employees for their work last year.

Judge Kevin Carey authorized the bonus payments after Tribune's chief financial officer, Chandler Bigelow III, testified that the bonuses are critical to keeping key managers motivated as Tribune tries to adjust to a tough economic climate for media companies.

In the severance-pay ruling, Judge Carey said that while he sympathized with the laid-off employees -- whose average length of service was 20 years -- he was constrained by the law from approving the payments. He sided with the trustee, concluding that Tribune had not demonstrated that the payments were essential to the operation of the company.

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