Cox Enterprises Inc. will have to give the Pension Benefit Guaranty Corp. $13.9 million to cover the unfunded pension liabilities of News-Journal Corp., a federal district judge in Florida ruled.
A minority shareholder of the News-Journal Corp., Daytona Beach, Florida, Cox forced the company to repurchase Cox shares after raising concerns of mismanagement, but an agreement could not be reached and in May 2004 the U.S. District Court in Orlando, Florida, stepped in.
When News-Journal sold its publishing operations to a third party in 2010 and the defined benefit pension plan was terminated, a court-appointed receiver found that Cox had priority over other claims and Cox received about $36 million. But the PBGC and other claimants argued before the court that paying Cox first violated Florida law on distributions to shareholders if they threaten the company's solvency. In the PBGC's case, that insolvency would make the company unable to pay the agency.
After being ordered by the 11th U.S. Circuit Appeals Court in Atlanta to reconsider Cox's claim, U.S. District Court Judge John Antoon II ruled Wednesday that as News-Journal's only other unpaid creditor at this point, the PBGC should have received $13.9 million before Cox received any assets. Cox has until Sept. 12 to repay that amount.
Hazel Bradford works for Pensions & Investments, a sister publication of Business Insurance.