According to Reuters, the settlement is the resolution to a plan spearheaded by Zell that put the pension plan for employees at risk through the purchase of the Tribune Company, which owns the newspaper.The plan reportedly utilized the pension fund to establish an employee stock ownership plan, increasing the Tribune's debt to $12.5 billion—ultimately helping to pave the way for Tribune's bankruptcy one year later, the news source said.
The ERISA lawsuit filed by the employees of the newspaper was led by former auto columnist Dan Neil, with the main accusation that GreatBanc, through Zell, violated federal regulations by leveraging the buyout, according to the news provider.
According to the US Department of Labor, the Employee Retirement Income Security Act (ERISA) of 1974 is designed to set minimum standards for pension plans for private businesses. While the act does not require employers to create pension plans, it specifies that if they do, they must meet at least the minimum standards.
In addition to resolving the lawsuit launched by the employees of the newspaper, the settlement reportedly brings a conclusion to allegations from the US Department of Labor, which included objections to the reorganization plan.
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Don Liebentritt, the chief restructuring officer of the Tribune, said that the settlement would be important down the road when the company finalizes its plan to escape bankruptcy, according to the news provider.
"This is a good result for all parties and ensures a smoother exit from bankruptcy once we have a confirmed plan," Liebentritt said.
The Tribune company said that the settlement needs to be approved by the US Bankruptcy Court for the District of Delaware as well as the US District Court for the Northern District of Illinois, according to the news source.
ERISA is enforced by the Labor Department's Employee Benefits Security Administration (EBSA), the agency's website noted.