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The real reasons the Star Tribune paid severance

Ace colleague Sharon Schmickle has also perused the raft of new Star Tribune bankruptcy documents, and comes up with the backstory on why management was so adamant a couple of weeks ago about paying bought-out workers in full. Here’s her dispatch:

The pile of documents just added to the bankruptcy court file include a transcript of a Feb. 6 hearing where Star Tribune attorneys argued for permission to pay severance to former employees who had taken buyouts.

According to the transcript, the newspaper’s New York lawyer, Marshall Huebner, said that courts “correctly cast a somewhat cautious eye at debtors talking about the need to pay lots of money to things for morale purposes.”

But he also tossed a sympathetic example into the argument: the case of Sharon Emery, a top-notch copy editor, who took a buyout last summer as part of a union deal to help the newspaper cut costs.

Suggesting more than a tad of moral outrage, Huebner told the judge that Sharon had “spent thirty-three years with the Star Tribune. Thirty-three years!”

Then Huebner segued into what he said were the real reasons to pay the severance:

First, he said, “It is cheaper to pay this for Star Tribune than to not pay it. … The unions have already begun to grieve the nonpayment of various amounts, including these, and we can talk until we’re blue in the face about the automatic stay and the filing date, but we still need to expend the time and resources and attorneys’ fees to address these grievances. … we could easily wrap up this amount in professional fees just talking about it.”

Second, “It is quite important to our labor negotiations to not begin on the absolute wrongest foot that one could want. … We need to have very substantial changes to our labor costs. To begin union negotiations asking for material concessions and, in part, offering buyouts when hours or days before you have breached recently made promises to pay people buyouts for leaving the premises is something that we think is highly destructive. … We have a lot to do in this case. A lot of it has to do with the unions, a lot of it has to do with honoring promises to them and having credibility with them.”

His third point, which he said he noted with “a bit of irony” was that they were dealing with journalists — a high-risk bunch in PR terms because they’re skilled information traffickers. Further, they were dealing with them in little-old Minneapolis.

“Many of the employees that are covered are Guild employees. They are our reporters and journalists and the people that help craft the news and the story that we can’t always control about the Star Tribune. So it’s particularly ironic that those with the microphone are, in fact, in no small part those who might feel themselves rather aggrieved by not having their compatriots receiving the severance that they were so recently promised. …

“This is a small, tightly knit community, it’s a relatively small tightly-knit city, and there is a lot of connectivity between the recently departed union employees and those that are still at the company. It is a news business. We have an arch competitor in town that is thrilled to making (sic) hay about our faltering nature and our inability to pay our bills and honor our promises.”

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