Freedom Communications committee targets former officers in lawsuit

By Caroline Salls

Pittsburgh, Jan. 26 – Freedom Communications, Inc.’s official committee of unsecured creditors filed a lawsuit Thursday in an effort to recover damages suffered by the company and its stakeholders “as a result of grossly negligent conduct and other breaches of fiduciary duty” allegedly committed by Freedom’s former chief executive officer and former president.

According to the complaint filed with the U.S. Bankruptcy Court for the Central District of California, a large portion of those damages stem from decisions by former chief executive officer Aaron Kushner and former president Eric Spitz as trustees of a pension plan.

The committee alleged that Kushner and Spitz decided “to waste millions of dollars of the pension plan’s assets – including funds entrusted by the pension plan’s participants – on two unsuccessful life insurance investments,” including a direct life insurance program and a life insurance settlement program.

The committee said Kushner and Spitz were aware that their investment decisions made on behalf of the pension plan directly impacted the funding status of the plan and thus determined what additional amounts the Freedom debtors were required to contribute to the pension plan.

“By frittering away the pension plan’s assets on the life insurance investments, Kushner and Spitz not only cost the pension plan (and its participants) millions of dollars and increased the debtors’ contribution obligations to the pension plan, but also – when the debtors were unable to satisfy those contribution obligations – increased the debtors’ liability to the Pension Benefit Guaranty Corporation and other creditors,” the motion said.

Specifically, the committee said in excess of $190 million of claims have been filed by the PBGC in the Freedom bankruptcy case.

The committee requested a jury trial and is seeking damages and avoidance of specified transfers and claims.

In addition to Kushner and Spitz, the complaint names Richard J. Covelli, Traci M. Christian, Larry P. Chinn, JTR, LLC, C & C Marketing LLC, C2 Advisors, LLC, Etaros Actuarial Services LLC and Financial Institution Consulting Corp. as defendants.

Based in Santa Ana, Calif., Freedom Communications is a newspaper company. It filed for bankruptcy on Nov. 1, 2015 under the Chapter 11 case number is 15-15311.

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