Former directors and the current chief executive of Orange County Register parent Freedom Communications Inc. are being sued for issues related to the Irvine-based company’s recent bankruptcy.
The lawsuit, filed in Orange County Superior Court, seeks $180 million in damages on behalf of unsecured creditors in Freedom’s bankruptcy, according to a story on the Orange County Register’s Web site.
The litigation was expected. In January, Freedom reworked its bankruptcy reorganization to allow unsecured creditors to sue.
Freedom, which operates the Register, other newspapers and TV stations, filed for bankruptcy protection in September and emerged at the end of April.
The company’s reorganization turned over ownership of the company to bond holders and investors that acquired Freedom debt during bankruptcy in exchange for forgiving about $445 million in debt.
Three New York-based investors are among Freedom’s new owners: Angelo, Gordon & Co.—which has acquired stakes in other struggling newspaper companies—Alden Global Capital and Luxor Capital Group.
Daniel Callahan, of Santa Ana’s Callahan & Blaine, is leading the litigation, which names former directors replaced during the bankruptcy and interim Chief Executive Burl Osborne.
The litigation seeks to collect damages from Freedom’s insurance policy covering executives and directors.
Freedom’s reorganization called for giving unsecured creditors $14.5 million, versus claims of about $40 million.
Unsecured creditors include former newspaper carriers who won a $28 million settlement from the Register last year.
Freedom didn’t pay a settlement before filing for bankruptcy.
For more, see the Orange County Register story.
