A plan to have Chatham Asset Management take ownership of bankrupt McClatchy Co. swiftly ran into obstacles as a government agency raised concerns that the newspaper chain’s dealings with the hedge fund disadvantaged its pensioners, Bloomberg News reported. The courtroom fight, part of bankruptcy proceedings that McClatchy kicked off last week, traces back to a series of debt deals Chatham arranged in 2018. Chatham owned the vast majority of McClatchy’s unsecured bonds in 2018 when it helped provide a new loan for the newspaper chain to extinguish those old debts. While the deal gave McClatchy more time to repay its borrowings, it was a boon for the hedge fund because it was able to trade in bonds that had been on equal footing with pension claims and other creditors for new secured debt that allowed the fund to leap- frog them in the repayment line. On Friday, the U.S. agency responsible for insuring pension plans demanded a Manhattan bankruptcy court allow time to scrutinize the deals, saying that they raise “significant concerns of possible fraudulent transfer.” “We need an opportunity to investigate,” Kimberly E. Neureiter, an attorney for the government’s Pension Benefit Guaranty Corp., told the court. McClatchy’s bankruptcy plan calls for handing ownership of the company to Chatham in exchange for extinguishing some of its debt. It’s also seeking to terminate its pension and hand control to the PBGC, which would continue paying the company’s pensioners. But the agency objected to a proposal that may give the hedge fund broad legal protections for the past deals. Judge Michael E. Wiles agreed, saying that there was no reason, so early, to make it harder to challenge those transactions.
