Risk Management

Black’s Former Company Settles Suits

Insurance policies held by Sun-Times Media, formerly Hollinger International, will pay to settle class-action suits.
Tim ReasonAugust 1, 2007

Sun-Times Media Group, Inc. has agreed to settle securities class action suits pending against it and a number of its former directors and officers.

In addition, the company — formerly called Hollinger International and controlled by Conrad Black — has worked out an agreement to settle litigation over its directors and officers insurance coverage.

The lawsuits alleged, among other things, that from 1999 to 2003, the defendants breached federal, state, and Canadian laws by allegedly making misleading disclosures and omissions regarding certain “non-competition” payments and the payment of allegedly excessive management fees.

The settlement will be funded entirely by $30 million in proceeds from the company’s insurance policies. The settlement includes no admission of liability by the company — indeed, the company specifically denied any liability.

Under the deal, the company’s insurers will deposit $24.5 million in insurance proceeds into an escrow account to fund defense costs the company incurred in the securities class action and other litigation or other claimed loss. The insurance carriers will then be released from any other claims for the July 1, 2002 to July 1, 2003 policy period.

The Associated Press noted that the plaintiffs include the Teachers’ Retirement System of Louisiana and the Washington Area Carpenters Pension and Retirement Fund.

The defendants included Black, who was convicted on July 13 of three counts of mail fraud and one count of obstruction of justice, as well past directors and officers such as former Secretary of State Henry A. Kissinger, former Illinois Gov. James R. Thompson and Black’s wife, Barbara Amiel Black.