‘Santa Barbara News-Press’ Bankruptcy Trustee Asks Judge to Find Wendy McCaw in Contempt of Court

McCaw’s Attorneys Meanwhile Seek to Have Lawsuit over Allegedly Fraudulent Building Transfers Dismissed

Wendy McCaw | Credit: Paul Wellman (file)

It’s been eight months since the Santa Barbara News-Press filed for bankruptcy, and the attorneys overseeing the sale of the company’s assets are asking a judge to find owner Wendy McCaw in contempt of court. In essence, it’s because she’s now asking herself for rent.

For those who need to be caught up, Wendy McCaw owned the 150-year-old News-Press for 23 years before sending it into Chapter 7 in July 2023. During her tenure, an acrimonious dispute erupted with her employees, and a union formed. McCaw, whose net worth is estimated to be more than a billion dollars, received a contempt judgment for failing to bargain in good faith with the union, an unpaid judgment of $3.6 million from accruing interest.

In the bankruptcy contempt motion, bankruptcy trustee Jerry Namba of Santa Maria and his attorney, Michael D’Alba of Los Angeles firm Danning Gill, state they have tried since August to inventory what’s inside the News-Press buildings — one a historic edifice next door to Santa Barbara City Hall, the other a concrete block building in Goleta that housed the printing press — in order to hold an auction to liquidate assets. As the motion to find McCaw in contempt lays out, they were stood up repeatedly. McCaw then demanded rental payments to use her buildings for the auction.

The rental payments are a major sticking point. McCaw transferred ownership of the two buildings from Ampersand Publishing/S.B. News-Press to herself in 2014, transfers the bankruptcy trustee argues “were a sham,” as they were without compensation and without any lease or rent payments. McCaw’s attorneys claim the trustee missed the statute of limitations for the transfer. They also argue that the trustee’s reliance on an IRS statute fails, as Ampersand had no tax consequences. That’s because the employee compensation McCaw was ordered to pay was never paid. They ask for the buildings lawsuit to be dismissed; that hearing is set for April 24.

In the latest contempt action, the bankruptcy trustee argues that because the News-Press never paid rent for use of the buildings, McCaw may not now ask for rent. In filing for bankruptcy, she relinquished control of Ampersand’s assets, the trustee states, and cannot now try to assert control in asking for a payment the company had not made before. Her attempt at control violates the automatic stay of bankruptcy law, the trustee says in requesting a contempt finding.

McCaw has not yet replied to the contempt motion, which was filed on March 25, but according to the document, she wanted rent and insurance information before any auction was held for “liability and other reasons.” The bankruptcy trustee notes this is an unusual demand as “the bankruptcy estate has no funds.”

For the trustee, however, the “bankruptcy estate’s property ‘sits,’” and he cannot perform his duties to liquidate assets to cash. He is further perturbed, the motion states, as McCaw’s attorney, Zachary Elsea of Los Angeles law firm Eisner LLP, told him workers were “coming and going” in the flagship building, which McCaw intended to renovate. What were they doing? he’d asked. Would the assets inside be damaged? No reply was made, the motion states.

Another related development in the News-Press lawsuits occurred last week when the National Labor Relations Board (NLRB) heard from the judge riding herd on employee claims. In the protracted litigation, which stretched from 2009 to 2017, an NLRB panel found against Ampersand and McCaw on a number of violations of labor law. Given that the News-Press is no longer a going concern, asked Judge G. Michael Harvey of the District Court in Washington, D.C., which of their claims were they still pursuing? Those requests had run from ordering McCaw to “refrain from unreasonable delay” in providing information to “send a representative with sufficient authority to bargain with the Union” to paying the NLRB’s costs.