The Kansas City Star announced in February that its parent company, McClatchy Company, was filing for Chapter 11 bankruptcy. In a statement, McClatchy said: “This restructuring is a necessary and positive step forward for the business, and the entire Board of Directors has made great efforts to ensure the company is able to operate as usual throughout this process.”

The newspaper chain also said it expects to transfer management of its $1.4 billion pension plan to the U.S. government’s Pension Benefit Guaranty Corp. The cost of the company’s pension plan was cited as one of the reasons McClatchy needed to seek bankruptcy coverage. Excessive debt from previous purchases, and a decline in printed newspaper circulation in recent years were other reasons, cited by local news sources.

According to a retired Star journalist, “The Pension Benefit Guaranty Corp. Rules state that this is a protected plan. The fund is healthy now. There are only 3,000 employees paying into it at this time. If you make over $5700 per month, your pension could be reduced. Most journalists don’t have to worry about that.”

“My guess is they will dress up the company to sell it,” he said.

Although bankruptcies can result in pensioners receiving less than they were due, McClatchy said Thursday that it believes its plan “would not have an adverse impact on qualified pension benefits for substantially all plan participants.”

In a court filing, McClatchy listed the PBGC as its largest unsecured creditor with a claim of $530 million. The PBGC and a federal judge would have to sign off on the company’s pension plan and sale.

Statement from PBGC on McClatchy bankruptcy filing:

“PBGC and McClatchy continue to engage in discussions to find the best path forward for the people covered under the company’s pension plan, as well as the millions of people in the other plans PBGC insures. As always, our goal is to protect the retirement security of workers and retirees,” the PBGC said in a statement.

The McClatchy Company which filed Chapter 11 bankruptcy on Feb. 13, 2020, is one of the top newspaper businesses in the US. McClatchy has about 30 daily papers with a combined circulation of about 3 million. Its portfolio includes The Kansas City Star, The Miami Herald, The Charlotte Observer, The Sacramento Bee (California), and the Star-Telegram (Fort Worth, Texas).