FNN bankruptcy plan delayed until fall.

FNN bankruptcy plan delayed until fall

Financial News Network Inc. announced last week it will now be fall before it submits its bankruptcy reorganization plan to the court, but the shadow of a company still plans to "present a plan that will satisfy creditors and simultaneously enable it to emerge as a healthy business."

FNN Inc. has been under Chapter 11 bankruptcy protection since March 1 and has sold off its major assets, including its FNN cable operations to competitor CNBC for $154 million. But rather than convert the bankruptcy filing to a liquidation, the company has maintained that it plans to reorganize and continue. It still owns a stock market data service division.

A multitude of lawsuits filed against FNN and its former top executives and auditors, alleging all manner of improper transactions and siphoning of funds, remain stalled by the bankruptcy proceedings. The FNN stockholders' lawsuit against FNN's executives has been placed on hold until Aug. 15, but FNN Inc. now says it will be fall before its plan is ready, which likely means a further delay.

"With the stay in place, there's not much we can do," said the stockholders' attorney, Allan Mansfield of the firm Milberg Weiss Bershad Specthrie & Lerach in San Diego. "Nobody's going anywhere. You really just have to take a wait-and-see approach."

Mansfield said it's possible FNN Inc. could be forced in Chapter 7 bankruptcy liquidation, "but it's not something you'd do because of a few months' delay. It's always a possibility."

Meanwhile, records in a lawsuit filed by former FNN Chief Financial Officer Steve Bolen against FNN reveal a possible explanation from Bolen for the missing $794,000 bonus that led to his firing. FNN claimed Bolen had misappropriated the money, and FNN later said it had been recovered. Documents filed in U.S. District Court by Securities and Exchange Commission investigators indicate the money may still be missing, along with millions more.

Bolen's lawsuit, filed in Los Angeles County Superior Court in Torrance, claims that Bolen had a verbal agreement with FNN's former Chief Executive Officer Earl Brian that Bolen would receive 1 percent of financing that he obtained for FNN and Infotechnology Inc., which owns 46 percent of FNN. Bolen asserts that he obtained $159 million in financing, entitling him to a $1.59 million bonus, but he received only $794,000 - the same amount FNN reported that Bolen paid himself in an "unathorized" transaction.

"That's not a coincidence," said Brian's attorney, Larry Hirsh. "That's what is at issue - whether he was really authorized to take 1 percent." Hirsh said he couldn't comment further because the money is an issue in the stockholders' suit against Brian, Bolen and others.

Bolen's suit against FNN apparently never was served on an FNN representative and has been dormant for months.

The lawsuit alleges Bolen is entitled to the $801,269 remaining due him on the financing deal. It also claims Bolen was fired without good reason and that FNN made false statements about Bolen to justify the firing.

Also last week, FNN Inc. announced the appointment of four people to its corporate board of directors. Two of the four are FNN's new co-chief executives, Allan Tessler and Alan Hirschfield. Also named were David Markin, president of Checker Motors Corp., and Robert Lynch Jr., president of American & Foreign Enterprises Inc.

Tessler and Hirschfield issued a statement saying they are "pleased to continue to direct FNN's restructuring." They were named co-chief executives in October. The appointments increase the size of the board from four members to eight.

In addition, Tessler, Hirschfield and Markin were named board members of Infotech, which also filed for Chapter 11 bankruptcy protection in March. Infotech, which owns United Press International, also announced it anticipates filing a reorganization plan in the fall.

- Staff reporter Liz Mullen contributed to this story