"Publicly available information regarding the 2018 Transaction raises serious concerns about whether fraudulent transfers may have occurred, or whether CAM's (Chatham's) claims should be partially or completely subordinated", said the filing from Joseph K. Grekin, a lawyer with Schafer and Weiner, which is serving as outside counsel for the PBGC.
McClatchy has significant investments in local markets, with 30 media companies in 14 states including properties like the Miami Herald, The Sacramento Bee and The Charlotte Observer.
The bankruptcy proceeding would also allow McClatchy to address some $800 million in unfunded pension obligations.
The firm said it will also pull its listing from the New York Stock Exchange and will become a privately owned firm.
Yesterday, Bloomberg News released an ominous report of the current state of Newspapers in America. As of January 1, 2019 the pension plan covered 24,500, while the company employs fewer than 3,000 in 2019, according to a court filing.
The company says it will continue to run normally as it pursues approval of its restructuring plan under Chapter 11. But the agency asked the court to investigate a complex 2018 transaction between McClatchy and Chatham, a hedge fund, before it begins evaluating McClatchy's reorganization plan.
The bottom line: "The filing foreshadows further cost-cutting and retrenchment for one of the biggest players in local journalism at a time when most American newsrooms already are straining to cover their communities", the Post notes.
McClatchy said it remained committed to journalism.
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Under the Chapter 11 filing, the company would be allowed to restructure its debts and rid itself of much of its pension obligations as it tries to reposition for a digital future.
"[But] when a large chain says we're going to emerge from bankruptcy stronger and more digital, these are red flags". Its 2019 revenue is anticipated to slide 12.1% from the previous year. "When local media suffers in the face of industry challenges, communities suffer: polarization grows, civic connections fray and borrowing costs rise for local governments. We are moving with speed and focus to benefit all our stakeholders and our communities", CEO Craig Forman told the Associated Press today.
Chatham said it owes $530 million in pension benefits alone.
Last year, McClatchy announced it was cutting Saturday newspapers at its properties.
In an ominous sign for the print newspaper industry, Warren Buffet's Berkshire Hathaway recently unloaded its 31 newspapers to Lee Enterprises for $130 million.
The publisher obtained $50 million in debtor-in-possession financing which, coupled with its operating cash flows, provides enough liquidity for McClatchy and all its 30 local news outlets to operate as usual, the company said.
McClatchy, which is still based in Sacramento, has suffered as readers have traded their traditional subscriptions to get their news online only.