(Updates with estimated payments in fourth paragraph.)
Oct. 4 (Bloomberg) -- Tribune Co. won court approval to pay as much as $42.5 million in incentive bonuses to 640 managers of the bankrupt newspaper publisher.
The recipients, who include television-station managers and newspaper executives, will split a bonus pool that will be based on Tribune’s operating cash flow at the end of the year. U.S. Bankruptcy Judge Kevin J. Carey approved the bonuses today in Wilmington, Delaware.
The bonuses are “critically important to maintain proper incentives for the management team,” Tribune said in a court filing dated Aug. 30.
Tribune expects to end the year with $517 million in cash, Brian J. Gold, a company attorney, said in court. That means executives would split from $26.4 million to $32.4 million, according to the plan. They would split $42.5 million should Tribune reach $700 million in operating cash flow.
Tribune filed for bankruptcy in 2008, one year after billionaire Sam Zell led a buyout that added more than $8 billion in debt onto the Chicago-based company.
Two groups of hedge funds are waiting for Carey to pick one of two competing plans to reorganize the company so it can leave bankruptcy.
The main dispute over which plan to approve involves the way to resolve allegations that the 2007 buyout was a fraud on creditors. Noteholders, led by hedge fund Aurelius Capital Management LP, want to sue lenders that funded the buyout.
Tribune backs a plan that would settle the main lawsuits against the lenders, including JPMorgan Chase & Co., and allow claims against Zell to go forward. Tribune’s plan is backed by JPMorgan, Oaktree Capital Management LP and Angelo Gordon & Co.
The bankruptcy case is In re Tribune Co., 08-bk-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--Editors: Stephen Farr, Andrew Dunn
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