After shedding Connecticut papers and employees, the Journal Register Co. wants to give big bonuses to the people who lowered the hatchets and helped put others out of work. The AG is fighting back and blasting the people at the top.
Attorney General Richard Blumenthal’s not happy about the company’s plan to pay its top execs up to $1.7 million in bonuses even as the newspaper publisher seeks Chapter 11 protection from creditors.
"We say that it illegally detracts from money owed to creditors like the state of Connecticut," Blumenthal told The Associated Press.
The company owes $21.5 million in corporate income tax as well as other unpaid taxes, including sales taxes, he said.
To add insult to the many who are out of work, the layoffs contributed to bigger bonuses.
Thirty one "key employees" could receive an average of $15,700 each if 450 positions are cut by March 31, according to the company's motion for "incentive pay" filed with the court.
Even more bonuses -- totaling about $1.2 million -- would be handed out if the employees met other goals, including eliminating publications and reaching certain financial targets.
Giving out bonuses partly for helping the company lay off hundreds of employees and close publications would violate federal bankruptcy law and "add insult to injury" in the midst of the current economic crisis, Assistant Attorney General Denise Mondell wrote in a motion filed in U.S. Bankruptcy Court in New York.
The company said that paying out the bonuses is cheaper than hiring outside people to perform the same tasks and that employees need incentives "to motivate them to maximize creditor recoveries."
A judge has to approve the plan.
Journal Register owns the New Haven Register and other newspapers in Connecticut. It sold two Connecticut dailies and closed several weeklies.
The publisher already paid out $450,000 in bonuses "tied to significant headcount reductions" at the end of 2008, just weeks before filing for bankruptcy protection, according to the company's motion.
Mondell wrote that the money would be better spent "to retain even a few of the positions slated for elimination or to provide some recovery to the unsecured creditors."
The company's next bankruptcy hearing is March 17.