Judge Blocks Sale of Hollinger

A judge on Thursday blocked Conrad Black’s plan to sell control of his publishing empire, Hollinger International Inc., to British tycoons David and Frederick Barclay, saying the ousted chief executive consistently breached his duties to the company.

Judge Leo Strine of Delaware’s Chancery Court ruled that Black “breached his fiduciary and contractual duties persistently and seriously” and that his conduct “threatens grave injury” to the company and its stockholders.

The judge threw out Black’s attempts to change the bylaws of Hollinger International in a way that would have tightened his control of the board of directors. Strine also upheld defensive measures the company took to block the deal with the Barclays.

The ruling marks a stunning setback to one of the most flamboyant and controversial figures in the newspaper business. Black defended his claim to run the company he founded the way he saw fit.

Pressure began to mount against him last year after minority shareholders raised questions about millions of dollars in payments that Black and his associates received, which the shareholders say should have gone to the company.

Those accusations led to an internal investigation that found Black and others received $32 million in payments that hadn’t been duly approved by the company’s independent directors, contrary to statements in the company’s regulatory filings.

Black was reviewing the court’s decision and considering his options, spokesman Jim Badenhausen said.

Hollinger International released a statement saying it was “extremely pleased.”

In trial last week, Black took the stand to defend his actions, saying he had been forced from the CEO suite by directors under false pretenses and had to sell control of Hollinger International’s parent company to avoid a financial crisis there.

Strine dismissed Black’s arguments, saying he owed a duty to the company to support a sale process he had agreed to under a restructuring agreement that he signed in November, which also included his removal as chief executive.