Debtor in Possession are three words you never want to see on your paycheck. But if you’re a Tribune Company employee, those are words you’ll soon see emblazoned across your paycheck. It’s warning to the banks: The company you work for is in Chapter 11Bankruptcy.
It also tells the banks that the check is good because, should it bounce, the check issuer, in this case Tribune Company, very likely risks going into Chapter 7 Bankruptcy, which involves closing up shop and liquidating whatever assets remain. And if there’s anything Sam Zell and his bankers probably don’t want right now, it’s a Chapter 7 filing.
I still remember those three words being on every check United Press International issued. It gave every bank cashier and/or clerk I dealt with some pause before cashing a check that had been issued to me by the company.
I experienced Chapter 11 more than 20 years ago when I worked for UPI. It was one of the most turbulent experiences in my professional career. In Chapter 11, you soon learn that there are no sacred cows and that everyone is dispensable.
In UPI’s case, the revenue stream, shrinking as it was, could no longer keep up with the company’s cost structure. If UPI’s management wanted the company to continue, it needed to borrow money. But to do so, the banks wanted to protect the money they were lending. As a result, UPI filed for Chapter 11, where it remained for about 18 months until it was purchased by a newspaper publisher from Mexico, Mario Vazquez-Rana.
Mr. Zell can say what he wants about being in firm control of Tribune, but the fact is the banks, especially J.P. Morgan Chase, are running the show. They may not have their own people sitting in the executives suite today, but they’ll be there soon. And they’ll start appointing their own people into Tribune’s management. People they can trust.
The same thing happened at UPI. Suddenly people with no experience in the media business, but plenty on Wall Street, wound up in charge. Each of them had to come up to speed on the company – its nuances, history and competition, employees and clients – so they understood the situation they faced. Some were successful at this; others were complete disasters.
The bankers have one mission – get paid. Mr. Zell can say he wants to keep the company intact, but that’s the bankers’ last and least concern. They want their money – and they’ll do what they need to do to get it, especially given today’s economic and financial climate.
I count my lucky stars (if I can use that phrase) that I experienced this when I was months shy of my 23rd birthday. The many UPI people who were older than me, laden with kids, college payments and mortgages, didn’t always hold up so well. Some left UPI for greener pastures. Some divorced; and some just hunkered down and did their job.
Chapter 11 is exhausting. It challenges you mentally – how do you look out for Number 1; pay your bills; handle your unpaid expense account; make the business you run work; keep people motivated; handle a spouse’s and/or family members (nagging) questions; plan for the future – and it’s also physically challenging. You feel beat up and, at times, powerless and helpless.
It can also bring about a gallows humor. At UPI, in Dallas, where I worked when the company entered into Chapter 11, a bank, right next to our office, where many of us had checking accounts, stopped honoring our paychecks. They told us we had to wait three to five days for the checks to clear before we could access the money. You can imagine the uproar that created.
So one of my colleagues, Dan Dalton, suggested we rent a school bus, pick up the homeless around Dallas, give each of them UPI credentials and then send them into the bank, telling them that the bank was holding a party in their honor. That would show the bastards, said Dan.
Tragically, we didn’t follow up on that idea. Reflecting back on that day now, we should have. It would have been fun.
My biggest challenge, at the time, was paying $1,500.00 in charges I’d racked up on my American Express card, which I’d used on the many sales trips I’d made. I still remember talking to some nice man at American Express, explaining that I couldn’t pay the bill. I later borrowed money from my dad so I could pay the tab.
And, as I recall, I bounced one or two rent checks as a result of UPI’s Chapter 11 filing because there were some problems with payroll.
Hopefully, the many things I went through at UPI will not happen to Tribune employees.
I feel awful for the many talented professionals working at Tribune who now have to deal with this. Sam Zell won’t suffer. But the many employees who’ve staked their lives and careers on Tribune will likely find that they’re bearing the brunt of this situation. That’s what makes it completely unfair.