The two principal owners of United Press International suggested yesterday that the wire service's filing for Chapter 11 bankruptcy protection voids an agreement they made to give up control of the company last month.
Douglas Ruhe and William Geissler argued that, as a result, they should be able to fire the creditor-backed managers of the company and regain control, the wire service reported. But it was not known whether the two Nashville-based businessmen would try to make good on the threat. Neither man could be reached for comment.
UPI's management, led by Chairman Luis Nogales -- who briefly was fired by Ruhe and Geissler last month and then reinstated at the insistence of the company's creditors -- responded that the company is under the control of a bankruptcy judge now, UPI reported.
Meanwhile, the Wire Service Guild, the union that represents about half of the company's 1,850 employes, said it would ask an arbitrator to force UPI to pay $200,000 in overdue expense accounts and $380,000 in back pension-fund contributions.
The disputes erupted as UPI was formalizing details of its Chapter 11 filing, which was made in federal bankruptcy court in Washington on Sunday afternoon. In the filing, documents of which became available yesterday, UPI listed liabilities of $45 million -- more than twice the debts that had been estimated for the company -- and assets of about $20 million.
Yesterday, lawyers for the company asked the federal bankruptcy judge hearing the case to approve a financing package agreed to by the company's principal lender, Foothill Capital Corp., of Los Angeles, to keep the company operating through the bankruptcy reorganization.
UPI's lawyers also asked the judge to free up frozen corporate funds to cover $1.3 million in paychecks issued by the company last week, saying "the employes of UPI are UPI's most critical asset."
In addition, the company asked permission to pay a total of $35,000 in severance to 35 of the 80 employes laid off by UPI over the weekend in a cost-cutting move. The other laid-off employes are not eligible for severance, the company said. In addition to laying off the employes, UPI closed several of its bureaus around the country.
The judge scheduled a hearing for this afternoon on the company's requests. It was not known when or where Ruhe and Geissler might try to press their contention about who controls the company. Ruhe and Geissler bought UPI from Scripps-Howard Co. three years ago for $1 and since have assumed $10 million in liabilities.
The two owners made Nogales chief executive last year, and he presided over a number of cuts in staffing and salaries that allowed the company to report slight operating profits in recent months.
But Ruhe and Geissler apparently had a falling out with Nogales and tried to fire him last month, only to have creditors, led by Foothill, threaten to force the company into bankruptcy. Nogales was reinstated a day later, and Ruhe and Geissler agreed to give up control of the company for 120 days while Nogales and Foothill Capital attempted to negotiate a reorganization of UPI's finances.
That reorganization failed to materialize, and UPI was forced to file for bankruptcy protection after Foothill refused last week to advance it the money for its payroll. Over the weekend, Foothill agreed to provide temporary financing to keep the company going.
Under Chapter 11 of the bankruptcy code, a company is protected from lawsuits by its creditors while it reorganizes its finances under supervision of the bankruptcy court. In such a situation, a company can be allowed to break contracts, such as labor contracts.
UPI's bankruptcy filing reveals that the company owes between $8 million and $10 million to secured creditors -- chiefly Foothill, which reportedly is owed more than $6 million -- and $35 million to about 1,500 unsecured creditors, including American Telephone & Telegraph Co., to which it owes more than $6.4 million, and American Express Co., to which it owes $1.3 million. UPI stressed in the filing that the figures are preliminary and would be updated in future documents. But the commonly accepted estimate of the company's debts had been between $17 million and $20 million.