OC Register Shareholders Claim Newspaper is "Insolvent," Demand Judge Place it In Receivership

Wheeeeeeee!
Wheeeeeeee!

The crater that is Aaron Kushner's ownership of the Orange County Register took another dramatic drop last week, when two shareholders with parent company Freedom Communications asked a judge in a Delaware court to take the paper away from the Kush and put it in a receivership, claiming Freedom is "insolvent." YOWZA!

The shareholders, Abbey Financial LLC and Old Colony 2012 Investment Fund LLC, go on to claim that Kushner (recently inducted into 2014 Bob Dornan Scary OC Hall of Fame) has "avoided business ending consequences by placating pressuring creditors to the detriment of other creditors while exacerbating obligations to other creditors." They filed the complaint on October 30, but it was unsealed only on Tuesday for reasons that'll become apparent in a bit.

The complaint mentions the lawsuit that the Los Angeles Times has against Kushner's company for not paying its bills for delivery service and that the shareholders believe Kush "does not have the resources to pay the amount it owes" the Times and that the massive disruption has "further exacerbated the Company's existing liquidity crisis."

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The trigger for this complaint is Kushner's attempt to sell some of the land on which the Reg's Grand Avenue officers (recently sold to mega-developer Michael Harrah) in order to pay off his creditors. And about those creditors: Abbey and Old Colony claim that Kushner defaulted on a November 2013 loan he took out from Silver Point Financial to finish the purchase of the Riverside Press-Enterprise, in an amount that's redacted, and that Kushner "does not have the resources to pay the accelerated amount to Silver Point."

"A receiver is needed to prevent action that will result in irreparable harm to the company, its shareholders (including the plaintiffs), and its creditors," the complaint continues. "In addition to the insolvency of the company, a receiver should be appointed because, as set forth in detail in the pending fiduciary litigation, [Kushner and co-owner Eric Spitz] have abdicated their independent decision-making responsibilities in favor of the company's lender."

The most interesting part of the complaint, however, is how much of the complaint remains redacted and under seal. One section, for instance, has the titillating headline "Defaults and Liens Under the Company Pension Plan." What the hell does THAT mean?! Could it refer to another section of the complaint in which it's claimed that Kushner had to pay a $4 million judgement to the Pension Benefit Guaranty Corporation, the government agency that takes care of pension funds for American workers with company pensions? And that Kushner couldn't even pay THAT?

In a statement to Law360 (which broke the story), some Freedom minion or other said the following: "Two shareholders are making meritless and unfounded claims against the company in an attempt to have the court appoint a receiver to prevent the company from selling its Santa Ana land, which these two stockholders supported just one year ago...There is no basis for the appointment of a receiver for the land sale."

More--much more--to come...

Email: garellano@ocweekly.com. Twitter: @gustavoarellano.

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