Bankruptcy Judge Lets UPI Stop Severance Payments, Continue Pay Cut
Sep. 24, 1991
NEW YORK (AP) _ A judge is allowing United Press International to stop severance payments and to continue pay cuts the news company said were necessary for its survival.
The Wire Service Guild, which represents some UPI employees, opposed Monday's action.
''The decision is bad news for UPI's employees who are forced to bear additional burdens and for UPI's clients who will receive a diminished, less professional news report,'' said guild President Kevin Keane.
U.S. Bankruptcy Judge Francis Conrad on Monday also granted the company's request to use stringers or temporary employees in place of staff it is laying off.
He refused, however, to take away the right of senior employees to bump junior workers from their jobs, as UPI had asked.
Pieter VanBennekom, president of UPI, said in a statement released in Washington: ''Today's court decision allows United Press International the opportunity ... to try to put the company on a break-even footing, while continuing talks with the Guild to reach a more permanent agreement.''
Under the contract, employees who had worked from one to 19 years received one week's pay per year when they were laid off. Employees who worked for 20 years or more received two weeks pay per year up to a maximum of 52 weeks pay.
Conrad gave the news service permission to stop paying severance and to use stringers until Nov. 29, the date the company said it would have to close if the concessions were not approved. He said the emergency measures were pending further court action, which could include a UPI request to make them permanent.
The judge also continued a 20 percent pay cut, to about $568 a week for top-level employees, until Nov. 29. The Guild had agreed to the wage cut previously but opposed the new measures.
At a hearing Friday, the Guild's attorney had urged the judge to reject the motion because he said it would gut the contract.
Conrad's order changing provisions in the labor contract did not include reasons for the ruling. He said he would file a longer written opinion later.
UPI's chief financial officer, David L. Moir, told Conrad on Friday that without the concessions, UPI would have a $1.9 million cash deficit by Nov. 29 and would be forced to stop operating.
Moir testified that the company, which filed for bankruptcy protection on Aug. 28, could break even by canceling the contract provisions, laying off more employees, continuing the 20 percent pay cut and trimming rent, phone and travel expenses.
Until last week, UPI employed about 585 people, down from a reported 1,600 before its purchase by Infotechnology in 1988.
UPI said last week that about 150 employees, including about 15 managers, will be fired in the next month or two.