WORCESTER — A Worcester Superior Court judge has temporarily put the brakes on the proposed sale of The Boston Globe and Telegram Gazette to Red Sox owner John W. Henry.
Judge Shannon Frison issued a temporary restraining order that stalled the sale Friday. The order came as part of a 2009 class action lawsuit filed against the Telegram Gazette by independent carriers of the newspaper.
Judge Frison told the attorneys that she would issue a decision on her restraining order on Wednesday.
Judge Frison issued the order at the request of lawyers representing the independent newspaper carriers, who are worried that the sale could prevent their clients from being able to collect a settlement.
“The defendant ... is hereby enjoined and restrained from transferring ownership or interest in any of its assets... until further order of this court,” Judge Frison wrote in her temporary restraining order. “The court retains the prerogative to inspect the financial documents of the defendant in order to resolve any disputes.”
In her temporary restraining order, Judge Frison put the “maximum end” of a settlement in the case at $60 million. In essence, the entire sale price of The New England Media Group could be set aside in an escrow account until the case is completed. The case has been in litigation since 2003.
The New York Times Co. and Mr. Henry had scheduled to close their reported $70 million sale of The New England Media Group — which includes the Globe, the Telegram, boston.com, and telegram.com — to Mr. Henry on Friday, according to Judge Frison’s restraining order.
On Monday, the New York Times asked that the judge’s restraining order be lifted, and the sale be allowed to go through. In exchange, the New York Times would set aside a sum of money — to be determined by Judge Frison — that would be designated to pay a future settlement in the case.
But The New York Times is not willing to assume liability for this lawsuit just to allow the sale of the New England Media Group to go through, according to Mark W. Batten, the lawyer representing The New York Times Co.
“I don’t think it was ever The New York Times’ intent to write a blank check to fulfill this judgment,” Mr. Batten said in court Monday.
Mr. Batten, representing The New York Times as well as the Globe and the Telegram, said the plaintiffs only should have access to the Telegram’s assets, not to the New York Times’, or the Globe’s.
Abbe Serphos, a spokeswoman for The New York Times, said the judge’s restraining order is the only thing blocking the sale. She also said that the fair market value of the Telegram Gazette’s assets will ultimately be determined by the court.
Judge Frison also issued subpoenas to The New York Times Co., Mr. Henry, The Boston Globe and the Telegram Gazette, ordering them to turn over all documents relating to the sale of the newspapers.
Lawyers for the newspaper carriers asked that the order be held in place, and the subpoenas be honored, so they can determine how much money the Telegram Gazette is worth.
“All of the proceeds of the sale should be put in escrow while the parties work this out,” said the newspaper carriers’ lawyer, James M. Galliher of Fitchburg.
In court Monday, Mr. Galliher also objected to The New York Times Co.’s proposal because he worried that “creative accounting” stemming from the sale could render the Telegram “basically worthless.”
According to calculations done by Mr. Galliher, The New England Media Group earned $380.4 million last year. But the sale price of $70 million constituted just 18 percent of that total, he said. The Globe is a “distressed property” that is being sold far below its value, he said.
The Telegram, on the other hand, is not distressed, as it has earned a modest profit every year. But in the sale process, the Telegram, which had $42.1 million in revenue last year, he said could be considered a negligible part of the deal.
“They could set the value of the Telegram at zero,” Mr. Galliher said.
That could leave the newspaper carriers without “adequate security” if the lawsuit is successful, he said.
In the lawsuit, newspaper carriers from the Telegram claim that they should be treated as employees, not independent contractors. A Gardner District Court judge, and later the state Appeals Court, have previously ruled in the newspaper carriers’ favor.