Freedom Communications, the former owner of The Orange County Register, has agreed to allow a committee representing its unsecured creditors to investigate possible legal claims against company insiders, according to court documents filed Wednesday in the Santa Ana division of the U.S. Bankruptcy Court.
The filing from attorneys in the Los Angeles-based office of Pachulski Stang Ziehl & Jones shows the committee wants to investigate and evaluate the debtors’ claims and ultimately prosecute or settle these claims.
William Lobel, a name partner at Costa Mesa-based Lobel Weiland Golden Friedman LLP, who represents Freedom, could not be reached for comment Friday.
About $1.5 million had been set aside for litigation expenses to serve as a financial reservoir for unsecured creditors, Robert Feinstein of Pachulski previously told the Business Journal.
Alan Friedman of Lobel said in March the committee will likely “go after anybody for having put the debtor in this precarious position,” an apparent reference to laws that can place retroactive restrictions on transfers of assets and payments made within 90 days of a bankruptcy filing.
This recent court filing is the committee’s attempt to collect on these transfers.
Digital First's agreement to pay $49.8 million in cash for Freedom will cover three secured creditors—$20 million will go to Silver Point Finance LLC in Greenwich, Conn.; $3.5 million will be divided between Freedom’s former chief executive, Mitchell Stern, and Mark McEachen, a former chief financial officer; and $16.2 million will go to Pension Benefit Guaranty Corp. for missed payments.