Bill Baldiga quoted in Law360 in Boston Herald Boosts Worker Focus In Ch. 11 Sale Plan
PUBLISHED ON: 02/06/2018
Brown Rudnick Partner Bill Baldiga was quoted in the Law360 article 'Boston Herald Boosts Worker Focus In Ch. 11 Sale Plan' in relation to Boston Herald securing Delaware bankruptcy court approval for a reworked sale process requiring part or all of any bid to include terms or cash that help cover displaced worker claims.
From the article:
"Wilmington -- A bankrupt and up-for-sale Boston Herald on Thursday rejected its contract with the Communications Workers of America but secured Delaware bankruptcy court approval for a reworked sale process requiring part or all of any bid to include terms or cash that help cover displaced worker claims.
U.S. District Judge Laurie Selber Silverstein approved the approach after Herald counsel William R. Baldiga of Brown Rudnick LLP summed up a compromise order authorizing the collective bargaining agreement rejection and disclosed a potential but still-unnamed third bidder for the more than 170-year-old daily.
The paper sought bankruptcy protection on Dec. 8 after years of economizing, cutbacks and pay freezes failed to stem losses, leaving the business in danger of running out of cash entirely this month.
Action on a proposed rejection of the Herald’s contract with the Teamsters Union Local 25 and an affiliate was postponed until the company’s sale hearing, scheduled for Feb. 16.
“You can see that the claims of employees are the great majority of claims in this case, and it’s no surprise because it’s all about people. We have no fixed assets of any significance,” Baldiga said. He noted that the potential claims for paid time off, severance, pension obligations and other expenses could run into the tens of millions for the company’s unionized employees.
GateHouse Media LLC and an affiliate of Revolution Media Group LLC already have entered bids for the company, although neither offered to pick up existing worker contracts.
RMG offered $3 million in cash and the assumption of $2 million in severance liabilities and $750,000 in paid-time-off liabilities, reduced by the amount of any subscription liabilities at the time of the acquisition. GateHouse offered $4.5 million in cash and the assumption of $500,000 in other liabilities. No details on the potential third bidder were available.
Baldiga said that revised bid requirements will oblige prospective buyers to make either a minimum cash offer or a combination of cash and an offer of jobs to at least 175 current Herald employees, as well as assumption of their accrued time off, credit for seniority, vacation and paid time off if applicable.
Although the comparable all-cash price is still being calculated, Baldiga said the company tentatively has estimated the amount at $7 million, with funds to be earmarked for employee claims. The actual minimum and bid-to-beat amount will be available on or before the Feb. 13 auction date, based in part on the leading bid at the time.
“If these contracts were assumed, any bidder would need to accept and assume and pay all of them, including pensions,” said Baldiga, who described the all-cash option as a compromise on potential disputes over contract assumptions.
“As we stand here today, no bidder has expressed an interest in doing that. Period,” Baldiga said of contract pickups by a buyer. He added that earmarking of sale proceeds was not as beneficial to workers as an assumption of union contracts but provided more than a contract rejection alone.
Sharon L. Levine of Saul Ewing Arnstein & Lehr LLP, counsel to the CWA and other Boston Herald locals, said the tentative $7 million minimum estimate remains “a legitimate math problem” but affects tens of millions in unsecured claims.
“We definitely want to signal to the market that there is an elimination of a large portion of claims here that are important claims,” Levine said.
Judge Silverstein questioned the company closely on differences between already approved bid plans and the revised approach, after assurances from Baldiga that nothing in the sale process restricted creditor rights to vote or predetermined the Chapter 11 plan overall.
“I have been convinced by the discussion that we’ve had, which I appreciated, that this, in fact, will not chill the bidding process but is simply a preclarification of a value that at this point the debtor is putting on the table for the noncash component, subject to discussion and adjustment,” Judge Silverstein said.
A court hearing to consider approval of the auction and sale is scheduled for Feb. 16.
Herald Media Holdings Inc. is represented by Curtis S. Miller, Tamara K. Minott and Jose F. Bibiloni of Morris Nichols Arsht & Tunnell LLP and William R. Baldiga, Sunni P. Beville and Tristan G. Axelrod of Brown Rudnick LLP."
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