BJ bankruptcy leaves retirees out in the cold
Merry Christmas? More like bah,
humbug!
In short, the sad news from Don
Screen of the Chandra law firm in Cleveland is that BJ, through its bankruptcy
filing, has left us holding the bag.
Prescriptions. Supplemental medical
insurance. The who shebang.
Don’s notification, including that
those of us benefitting for 8 years when Chandra won the healthcare lawsuit for
us (in my case, it totals $60,000 for the 8 years and my $16,000 reimbursement
check for underpaid coverage at the time the lawsuit was settled):
All,
As you know, I attended (via Zoom) a meeting of the Beacon Journal
Publishing Company's unsecured creditors on Monday, December 28, 2020. The
meeting was hosted by Marc Gertz, the bankruptcy trustee, and was attended by
about 10-12 people, including David Black (Chairman of Black Press Media), Rick
O'Connor (Black Press President and Chief Executive Officer), Mark Merklin (the
BJ's bankruptcy attorney), an attorney for the Teamsters local, some other individuals who did not identify
themselves, and a due to a technical glitch on Gertz's end, I was not able to
access the Zoom feed until about 25 minutes into the meeting. I was on the
phone at the time with Ruth West, though, and she was kind enough to hold her
phone up to her computer speaker so I could hear (much of) what was being
discussed. The following is based on my limited, and possibly fallible,
understanding and recollection of the testimony.
The meeting began with Gertz swearing in David Black, who
then answered questions from Gertz and other participants under oath. Black
testified that Black Press bought the BJ, including its retirement and pension
obligations, from McClatchey in 2006 for $165 million in stock and placed it
under Sound Publishing Company's ownership. Sound continued to own the BJ
until 2018, when it sold most of the BJ's assets (excluding its building and
real estate) to Copley, Ohio Newspapers, which in turn was owned by Gatehouse
Media. Also in 2018, the BJ ceased operating the newspaper but continued to
collect certain revenues from Gatehouse. It continued to pay retiree pension
and health-insurance benefits (including the prescription card) through
November 2020. Although it was not entirely clear from what I heard, Sound
Publishing appears to have administered and funded these
benefits. (This may explain why retirees received healthcare-insurance notices from
Sound.) But the obligation to pay claims remained with
the BJ, which continued to honor that obligation through November
2020. I also understood that at least the health-insurance and
prescription benefits were self-funded. That is, rather than
pay premiums to a health-insurance carrier such as United Healthcare, the BJ
itself paid healthcare and prescription-drug costs as claims arose.
After suffering through COVID and selling its building
in 2020, according to Black, the BJ has no real estate assets. It also has
no stocks, bonds, or accounts receivable. The BJ's bankruptcy petition
discloses that the company's liabilities total $132,786,223.95 ($76,428,314.95
of which is owed to unsecured creditors), while the company owns only
$294,000 in assets. Retirees such as yourselves are listed (by name) as
unsecured creditors to whom "$0" is owed.
A few other participants asked questions of Black, who frequently
deferred to O'Connor. One retiree asked about his $15,000 life-insurance
policy, to which Black responded that "there's no money for that."
(It occurs to me that retirees who paid for life insurance through the BJ may
wish to inquire whether all or any portion of such insurance was
"vested" or otherwise remains or has become the obligation of the
insurance carrier rather than the BJ. If so then that obligation may survive
the BJ's bankruptcy, but I have no way of knowing if that is the case.)
The Teamsters' attorney asked about pension benefits. I followed
up on that question and learned from O'Connor that the BJ has applied for
transfer of its pension obligations to the Pension Benefit Guaranty Corporation
(or "PBGC," a government agency that guarantees private pension
obligations) but that its application remains "pending" at this time.
I believe I understood that pensions would continue to be paid in the interim.
You should follow up regularly to learn the current status of the application
and of your benefits.
Gertz brought up our 2012 class-action settlement in Judge Dowd's
court. He read the paragraph from our settlement agreement, which I drafted,
requiring the BJ to ensure that any company that buys its assets or stock
agrees to assume the BJ's healthcare-insurance obligations as well. When it was
my turn to question Black, I followed up on that inquiry by asking whether, at
any time between 2012 and the present, the BJ sold a substantial portion of its
assets or stock (or transferred its healthcare obligations) to any other
entity. I mentioned that, if that had happened, the termination of benefits may
suggest that a breach of the settlement agreement has occurred, in which case
we could seek to force the purchasing entity to restore the benefits. O'Connor,
however, answered that nothing like that had occurred, and that those
obligations have remained with the BJ at all times.
I also complained loudly about the BJ's (and Sound's) lack of any
notice to retirees about the impending termination of their benefits. I asked
(rhetorically) if Black knew how the retirees learned of the termination.
Hearing no response, I informed him that they learned when they walked into
their local CVS or Walgreens and were advised by their pharmacists that they
had no coverage. I added that, while a lucky few discovered the cancellation in
time to enroll in Medicare Part D or other private insurance, most were unaware
of the issue until after the open-enrollment window closed, are currently
without coverage, and will remain so unless they can establish the occurrence
of a "qualifying event" that would allow them to enroll now. Both
Black and O'Connor appeared befuddled. Black muttered something like "Oh
dear, that's not good. That shouldn't have happened." But neither he nor
O'Connor were able to explain why it happened, let alone
propose to rectify the situation in any way.
The sad bottom line appears to be that, while the BJ itself
retained the retiree health-insurance obligations (I asked O'Connor for a
letter confirming that fact, and he agreed to send me one), it has no assets to
continue paying benefits and so will not do so. (Both Gertz and Merklin have
advised me independently that, even if the obligations the BJ undertook in our
settlement agreement were for some reason not "dischargeable" in the
bankruptcy, it wouldn't matter because there would be no money to pay for them
anyway.) While this appears to be "the end of the line" for our
effort to have your benefits restored, I hasten to add that neither I nor
anyone in my firm is a bankruptcy attorney and we simply cannot pronounce
authoritatively on these issues. We advise anyone who wishes to challenge or
pursue the BJ in this matter to retain the services of a qualified bankruptcy
attorney, who should be able to advise whether anything can be done.
I regret to communicate this unfortunate news. We fought hard
for you back in 2010-12 and were able to secure coverage for eight years more
than the BJ would have been willing to provide it without the lawsuit. Sadly it
didn't last for your lifetimes as originally promised. I sincerely hope that
you are all able to procure satisfactory coverage at a reasonable cost, and,
better yet, that your health will be such that you won't need it.
Happy New Year to all!
Don
--
Donald Screen
The Chandra Law Firm LLC
The Chandra Law Building
1265 W. 6th Street, Suite 400
Cleveland, OH 44113.1326
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