A federal bankruptcy trustee has filed a complaint alleging that the property transfers of the Santa Barbara News-Press building in downtown Santa Barbara and the Goleta printing plant were “a sham,” and done only to prevent paying off a mountain of debt to former employees and to “defraud creditors.”
Jerry Namba, U.S. Bankruptcy Court trustee, filed the complaint against Ampersand Publishing LLC, parent company of the News-Press, late last month.
It alleges that owner Wendy McCaw transferred ownership of the News-Press building, 715 Anacapa St., a nearby parking lot, and the printing plant, 725 S. Kellogg Ave., in 2014 to purposely avoid paying off debts.
“Plaintiff is informed and believes, and based thereon alleges, that the debtor made
each of the subject transfers with the actual intent to hinder, delay, or defraud one or more of its creditors,” the complaint states.
The complaint calls the building transfers “a sham.”
The bankruptcy complaint contends that the News-Press building and the printing plant “are assets that the trustee can use, sell or lease. The court should order turnover of the office building and the plant to the trustee.”
The buildings could at that point be sold, with the proceeds used to pay off debts.
Ampersand also allegedly paid no rent for use of the buildings that it transferred, while charging other third-party entities rent.
Ampersand also owes the IRS about $135,000 in taxes on unpaid wages, the complaint states.
The complaint alleges that Ampersand was liable to the IRS for wage withholding taxes at the time of the office building and plant transfers in 2014, and that such taxes remained unpaid.
Ampersand filed for bankruptcy last July, and eliminated all jobs at the newspaper.
Former employees, represented by The Teamsters union, and other creditors are owed more than $5.13 million from labor case court judgments, according to public records.
Santa Barbara County Assessor’s Office records show that the Anacapa Street building has a 2023 assessed value of $15.2 million. The parking lot property across the street has an assessed value of $3.17 million.
The Goleta property at 725 S. Kellogg Ave. is assessed at $11.59 million.
The complaint also alleges that Ampersand has not allowed the bankruptcy trustee access to either of the buildings to determine what other assets may exist.
Bankruptcy documents filed by McCaw’s attorneys listed more than $5 million in debt and few assets, including office furniture and some items of unknown value, such as the newspaper’s archives.
Electricity and other utilities to the office building and the plant have been turned off “even though their expressed intent is to remodel the interiors of one or more of the office building and/or the plant,” according to the latest court filing.
Namba alleges that the “ongoing wrongful conduct” managing the two buildings “is causing irreparable harm” and “creating the risk that the value of the property of the bankruptcy estate, over which they are exercising control, may be lost or diminished.”
In 2014, McCaw transferred the three News-Press-associated properties to newly created limited liability companies she controlled, according to public records.
The newspaper parent company’s bankruptcy filing does not list the properties as assets, and her bankruptcy attorneys argue that they cannot be touched to settle the company’s debts.
The downtown building and parking lot were transferred to 715 Anacapa LLC, and the Goleta property was transferred to 725 Kellogg LLC.
No money changed hands, McCaw testified in a bankruptcy court creditor’s hearing last year.
She also said the News-Press had no lease agreements and paid no rent to occupy the buildings, even after Ampersand Publishing no longer owned the properties, Noozhawk reported at the time.
Several creditors’ hearings have been delayed in bankruptcy court, and the next meeting is scheduled for February.
Calls and emails to Ampersand Publishing’s bankruptcy attorney were not returned.
California Secretary of State records show that the two LLCs created in 2014 have a principal address of 1301 Santa Barbara St., and filing documents list McCaw as manager, president or CEO.
They have the same principal address as McCaw’s Ampersand Publishing LLC, 1998 Ampersand Holdings LLC and the Wendy P. McCaw private foundation.