Maxwell’s Sons Forced to Leave Executive Posts : Media: Kevin and Ian Maxwell quit in the face of evidence that the debt problem at the company is worse than feared.

A mounting debt crisis that threatens to topple the media empire of the late Robert Maxwell forced the two sons who succeeded him to step down Tuesday from their positions at the family’s flagship company.

Kevin Maxwell, 32, who long had been considered the heir to the Maxwell empire, resigned as chairman and chief executive of heavily indebted Maxwell Communication Corp., while his brother, Ian, 35, resigned from the board of directors.

Ian Maxwell will remain chairman of Mirror Group Newspapers, the family’s other publicly traded company, while Kevin will stay on as chairman and publisher of the Daily News in New York.

The Maxwell family fortune was estimated at nearly $2 billion before Robert Maxwell’s mysterious death at sea Nov. 5. Since then, creditors have discovered a tangled web of finances built on loans between some of the family’s public and private companies.

The family’s debts now are estimated at up to $1.75 billion, while Maxwell Communication owes about $2.5 billion.

Kevin Maxwell said he stepped down to clear the way for inquiries into the company’s finances.

“Shareholders and the board must not think that any inquiries into (Maxwell Communication’s) affairs will be impeded in any way by the obvious loyalty I feel to my late father, and for this reason I am resigning from the board while these inquiries are conducted,” he said.

Deputy Chairman Peter Laister has been appointed chairman of Maxwell Communication, and David Shaffer has been made group managing director, in addition to his role as group chief operating officer and president of Macmillan Inc., the company’s U.S. publishing subsidiary.

Asked whether the family business faces the possibility of being put under administration, a move that would protect it from creditors while it is run by court-appointed officials, Kevin Maxwell said: “In the absence of continued bank support, obviously yes.”

A group of banks that have loaned money to the Maxwells agreed to give the family a little breathing room Tuesday by extending until Friday a freeze on debt repayments, Kevin Maxwell said.

Bankers said the family has offered to speed up asset sales, but some expressed skepticism.

“All involved are working to see if there is any chance of rescuing something from this awful mess, but it remains to be seen if the firms can be saved,” one banker said.

Kevin Maxwell said that if the banks withdraw support from the family companies, “any possible writeoffs or provisions” in the public company would have to be examined.

Trading in the two companies’s shares was suspended Monday at their request, with Maxwell Communication selling for 62 cents a share, compared to $2.14 at the time Maxwell disappeared from his yacht near the Canary Islands.

Kevin Maxwell acknowledged that the public part of the group lent money to the private side, but he declined to give details.

He said his father had not left him and his brother in the dark, but “clearly we did not know everything, clearly he had a style of business run on a need-to-know basis.”

He would not make predictions on family asset sales or the future of the company’s 51% stake in Mirror Group.

Analysts said the future was cloudy for money-losing companies among the private businesses, which include such newspapers as the European and the Daily News.

Kevin Maxwell said there would be no sacred cows.

“I don’t want to give you the impression either my brother or I is being emotional” about asset sales, he said.