The rump of Conrad Black’s former newspaper empire, Sun-Times Media, filed for bankruptcy protection on Tuesday, citing the burden of paying the disgraced press baron’s legal fees as one of its financial woes.
Previously known as Hollinger International, the Chicago-based Sun-Times group once controlled a global network of papers built up by Black, who controlled the business until he was caught plundering money from shareholders in 2003.
The company, which owns the Chicago Sun-Times, 58 local papers and the UK’s Daily Telegraph, said it was struggling to cope with slump in advertising on top of tax and legal liabilities dating back to previous management.
“The significant downturn in print advertising that has affected newspapers across the country has continued to severely impact us,” chairman Jeremy Halbreich said. “Unfortunately, this deteriorating economic climate, coupled with a significant pending tax liability dating back to previous management has led to today’s difficult action.”
Sun-Times has been struggling to settle a US$600 million dispute with tax authorities dating back to a period between 1996 and 2003 when Black served as chief executive.
An indemnity clause guaranteeing that the company would protect its directors against legal action has also proved costly as Black and other senior executives were convicted of fraud and jailed in 2007.
A spokeswoman for Sun-Times said that as of September, the cost of defense fees for former executives had reached US$117.9 million.
“We’re now a small newspaper company,” she said. “That’s a lot of money for a small company.”