McClatchy Trust case finally goes to court.
James B. McClatchy created a trust in an effort to prevent his media company from being absorbed by a larger company. His son, Carlos McClatchy, is now getting his day in court concerning the trust after years of preliminary work, according to the Sacramento Bee in “San Francisco trial weighs breach-of-trust claims by McClatchy family member.”
Carlos McClatchy is claiming that the terms of the trust were violated in 2006, when McClatchy purchased media company Knight Ridder Inc. James McClatchy died in 2006.
Carlos McClatchy claims the purchase caused a decline in value in McClatchy’s common stock and subsequently caused the company to stop paying dividends.
The trust points out that at the time of the purchase, James McClatchy was the sole income beneficiary of the trust and he supported the purchase.
It also claims that, at the time dividend payments were stopped, there was a financial crisis that was responsible for the stoppage.
It is not clear which party is in the right. The court will have to settle that.
What this illustrates is that trustees need to be careful with how they handle trust assets.
Reference: Sacramento Bee (Sep. 13, 2017) “San Francisco trial weighs breach-of-trust claims by McClatchy family member.”
