UPI Paychecks Made Good



Here is a May 6, 1985, story by UPI's Greg Gordon concerning bounced payroll checks for UPI staffers:

------

WASHINGTON (UPI) -- Officials of United Press International Tuesday promised employees that this week's paychecks -- the first for work since the wire service filed for Chapter 11 bankruptcy protection -- will arrive on time and will be fully covered.

In New York, UPI president Ray Wechsler and other officials held a "cordial" meeting with a committee of unsecured creditors owed an estimated $25 million in short-term debts to begin negotiating a settlement aimed at saving the firm, a lawyer for the company said.

Richard Levin, a bankruptcy attorney representing UPI, said that under Chapter 11, protection that freezes past debts, "the cash flow from week to week is going to be very close."

He said UPI will be promptly paying all bills -- including stringer costs that have lagged months -- keeping the new entity debt free. He said it appears "the creditors are willing to ride it out and see what happens, generally."

In a message to employees, budget officer Steven Spritzer said, "The May 10 payroll is fully covered and staff should deposit the checks as usual."

While the checks will not contain overtime earn for work performed before the April 28 filing, Spritzer said, UPI lawyers have determined that bankruptcy laws permit payment of such overtime so long as wages for pre-petition work do not exceed $2,000 per employee.

Much of the $2,000 limit was exhausted for many of 1,250 employees who are paid in U.S. dollars when replacement paychecks were issued May 2. Some employees will not receive full payment for past overtime work, company officials said.

There were these other developments:

-- UPI reached a tentative agreement with the Prudential Insurance Co. of America under which it will pay the insurer $190,000 to assure full medical and life insurance coverage for employees. Prudential advised UPI three days before the Chapter 11 filing that it would process no further claims. The proposed new agreement, subject to court approval, would cover all claims, past and present.

-- In a submission to the bankruptcy court, the Internal Revenue Service objected to a UPI request for permission to pay four weeks pay -- totaling $35,000 -- to 35 of 80 employees laid off without notice two days before the Chapter 11 filing. The IRS, which has filed a $1,8 million lien on UPI's assets for failure to pay employee withholding and Social Security taxes during the last quarter of 1984, argued the plan was not submitted with "sufficient notification" to all creditors and was not part of an overall reorganization plan. The creditors committee had advised the court it had no objection to the payments.

-- The ex-employees, at least two of whom had been with UPI more than 20 years, will have the status of unsecured creditors in seeking severance pay. Those laid off included 55 part-time, temporary and permanent editorial staffers. Levine said the employees were terminated at the insistence of a key lender, but acknowledged company officials "were mindful of the fact that there would be significant severance pay savings possible if the terminations were effected before the Chapter 11." The decision, which could cost a few employees several thousand dollars in lost severance pay, was "agonizing," Levine said.

"I know there were executives in this company who were very, very concerned . . . it was made with a lot of regret," he said.

Levine said the company still is deciding whether to ask the court for special permission to reimburse employees for long-overdue expenses.

------

UPI 05-07-85 05:44 PCD

______________