Chicago Sun-Times Continues Bankruptcy Negotiations

When a business files for chapter 11 bankruptcy it’s not just the organization that goes through major changes. Many employees are affected by these changes, whether they lose their jobs or their benefits. But these decisions aren’t made over night. Many discussions occur between the business men and the union.

The Chicago Sun-Times parent company- Sun-Times Media Group Inc., filed for Chapter 11 bankruptcy, but the company may not have the money needed to complete a reorganization. In fact, as the Chicago Tribune and Chicago Sun-Times report, the company may not even have enough money to fully close down shop and cover their financial obligations, including benefit payments to workers.

Chicago financier Jim Tyree agreed to spend more than $25 million to rescue the company, but only on the condition that major changes needed to be made, including changes to union deals and compensation.

According to his plan, employees get to keep their jobs but not without some form of cutbacks. Letters were sent to the union stating employee benefits and compensation could be cut. There was also the possibility of eliminating some work rules. Tyree’s plan includes will be a sharp decline in retirement payouts along with a new 401k plan.

Non-union employees’ salary might be cut by 8-11 percent. But according to representatives for the Sun-Times this deal will save the company from going under and failing. Ultimately, Tyree says, this could save many employees from losing their jobs and maybe even preventing future personal bankruptcies.

Current Sun-Times owners are set to recommend the Tyree option to a Delaware bankruptcy court, who will make a decision on the future of the company. Tyree’s was the only bid after a deadline expired with no other suitors for the company stepping forward.

The Chicago Newspaper Guild, however, have so far yet to budge, saying they will not agree to Tyree’s proposals of pay cuts, frozen pension funds and new work rules, including “abandoning seniority.” Even though the company could face liquidation, there are no guarantees that the union will agree to the terms, although Sun-Times officials have been in long meetings with the guild.

Depending on the ruling of the Chapter 7 bankruptcy judge, the Sun-Times, its employees and readers may not have a choice in the company’s future direction.