The management-endorsed bidder for United Press International filed a $50 million lawsuit yesterday, accusing a competing bidder of illegally trying to interfere with the sale of the financially troubled wire service.
In the suit brought yesterday in bankruptcy court in the District, lawyers for Mexican publisher Mario Vazquez Rana alleged that Financial News Network, leader of a consortium seeking to buy the company, "has undertaken to subvert the orderly culmination of the court-approved bidding process."
Paul M. Steinle, FNN's president and chief executive officer, denied the charges, saying, "We have never attempted to disrupt the sale of UPI. That's not our intention. Our only intention is to put forward an offer for the company."
Yesterday's lawsuit was the latest shot in an escalating legal battle over FNN's effort to press its bid despite losing out in the final days to Vazquez and his junior partner, Houston financier Joe E. Russo. Vazquez and Russo offered to buy the company for $41 million in a deal that was recently endorsed by UPI management, the union representing its workers, and a committee of the company's creditors.
The deal is still subject to approval by the bankruptcy judge overseeing UPI's reorganization under Chapter 11 of the federal bankruptcy code.
In the meantime, FNN has attempted to persuade UPI's subscribers and creditors that its bid is better than the Vazquez-Russo proposal, and has also suggested in letters that it was not given fair consideration in the bidding process.
U.S. Bankruptcy Judge George Bason granted a temporary restraining order on Monday preventing FNN from soliciting individual UPI customers or creditors, although he said the company could communicate with the creditors committee, UPI management and the union. On the same day, the union filed its own suit against FNN.
FNN submitted another bid this week for UPI, in which it raised the amount of money it is offering to unsecured creditors. A UPI spokesman, however, said the wire service's management remained committed to the Vazquez-Russo bid.