In another blow to former Santa Barbara News-Press employees, the bankruptcy trustee is terminating the company’s 401(k) retirement plan and will pay the fees out of their accounts.
When Ampersand Publishing owner Wendy McCaw filed for bankruptcy in July, the News-Press stopped publication, and Managing Editor Dave Mason told employees their jobs were eliminated.
McCaw claims in court documents that the parent company has about $5 million in debts, including payments to former employees and vendors, and much less in assets.
Last month, U.S. Bankruptcy Court Judge Ronald A. Clifford III approved terminating the Nationwide Financial 401(k) employee benefit plan because the business no longer exists.
Bankruptcy trustee Jerry Namba and his attorneys said former News-Press employees “have apparently been contacting (plan administrator Latitude Retirement) to inquire about the status of their 401(k) accounts and how the funds will be distributed.”
Requests to distribute the money couldn’t be processed because of the bankruptcy filing, bankruptcy attorneys wrote in court documents.
Former News-Press sports writer Mark Patton said he’s been trying to roll over his 401(k) into an IRA account “and have been getting nothing but a total run around from everybody,” including Nationwide, Latitude, and the bankruptcy attorneys.
“I’m on a fixed income and paying these fees will hurt. I know some of the others can’t pay them at all,” said Patton, who is now a Noozhawk contributing sport writer. “I wanted to start collecting on my 401(k), and nobody seems to care that I’ve been prevented from doing that.”
He didn’t know that the termination fees would be paid from his account until contacted by Noozhawk for this story.
“This is the first I’ve heard of this,” said Patton, who retired from the News-Press in 2021.
The plan’s third-party administrator, Latitude Retirement, apparently wasn’t notified about the bankruptcy. Client relationship manager Sherry Newton emailed Namba on Sept. 12 saying she had heard the business had closed.
Newton asked Namba to fill out paperwork to terminate the retirement plan and pay out plan assets, and the court authorized him to do that on Oct. 18.
Latitude Retirement documents indicate $13,884 in termination fees and IRS filing fees. They’ll be paid from participant accounts – the 31 people with 401(k) accounts at the News-Press, according to court documents.
“The trustee does not propose that the fees of the trustee and his employed professionals incurred in handling the termination of the plan be paid from assets of the plan,” wrote bankruptcy attorney Michael G. D’Alba, who works for Namba.
“However, the trustee does seek authority to pay, from the assets of the plan, Latitude for its services in terminating the plan, and the IRS for any fees that are required to terminate the plan and to file necessary documents with the IRS for the plan.”
Bankruptcy attorneys will notify former employees with 401(k) plans of the termination and their options for the money in their accounts, such as putting it into another eligible retirement plan.
Namba said in a court declaration that he was only given access to the downtown Santa Barbara News-Press building and printing plant offices once, and McCaw won’t give him keys.
“The office and the plant are very large facilities, and had been shuttered while in a state of organizational disarray,” he wrote. Namba said he didn’t know where certain records were stored, including the 401(k) plan information.
In a September hearing for the bankruptcy case, D’Alba and other attorneys questioned McCaw about the assets and the debts for Ampersand Publishing, the parent company of the Santa Barbara News-Press.
The assets conspicuously exclude real estate because McCaw transferred the newspaper’s historic downtown Santa Barbara building at 715 Anacapa St. in 2014 to another limited liability companies she controls, and apparently paid nothing to do so.
She did the same for the Goleta printing press building at 725 S. Kellogg Ave. in Goleta.
Even after the newspaper stopped owning the buildings, it occupied them without a lease or paying rent, she said during the hearing.
The next hearing date in the case is Nov. 30. Previous dates were scheduled and then delayed when McCaw wasn’t available, according to Namba.
The list of the top 20 creditors in the case includes several former News-Press employees who are owed millions of dollars for court-ordered backpay due to labor violations.
A National Labor Relations Board case has stretched on more than 15 years. McCaw’s company was found liable and ordered to pay employees $2.2 million, plus interest, but the payments haven’t been made.