Michael Kong, the former CEO of Modern Luxury Media, along with ex-CFO Jeff Goldstein, are suing the magazine publisher, which could throw a monkey wrench into the Dickey family’s planned buy of the company.

According to court documents filed in Los Angeles Superior Court on Aug. 5, both Kong and Goldstein are claiming that Modern Luxury has breached their employment agreements and has failed to indemnify and defend them against lawsuits stemming from their actions on behalf of the company.

In June, Juli Benlevi-Zeff and JBA Holdings sued Kong, Goldstein, Modern Luxury and other defendants, in a separate Delaware complaint, for $8.5 million in damages. (It’s unclear why Benlevi-Zeff is suing although Modern Luxury acquired her company, JuliB Inc., a publisher of twice weekly e-newsletters, in 2008.)

I’m hearing that the Dickey Family paid around $20 to $25 million for Modern Luxury Media.

Last week, Dickey Publishing announced it had acquired the assets of Modern Luxury, which includes 26 titles in 12 markets, like New York, L.A. and Chicago. The Dickey Family controls Cumulus Media, which will operate Modern Luxury through Cumulus’ Structured Management Services division.

Modern Luxury was expected to sell for $10 million but ended up going for $20 to $25 million. Some think that’s too high. The magazine company, though operating in many markets, is losing money. Earlier this year, Modern Luxury ousted its CEO, Michael Kong, after defaulting on $120 million in debt.

It’s Tuesday and the sky is warning of rain so this update on the Modern Luxury Media auction will be short.

peHUB has previously reported the Greenspun Corp., which owns Niche Media, had been vying for the magazine publisher. We’ve now learned that the “smart money” –which is believed to include bidders like Curtco Robb, Bonnier Corp., Greenspun as well as some VC firms — was out of the Modern Luxury auction a few weeks ago, one person says.

We finally know who the mystery bidder is for Modern Luxury.

According to the New York Post, the Dickey Family, which controls Cumulus Media, is near a deal to buy the magazine publisher. Last week, peHUB reported that one of the two bidders for Modern Luxury was a radio owner with some publishing assets. We ruled out Jeffrey Smulyan of Emmis Communications. In truth, I was told it could be Cumulus but I didn’t have enough to go with.

We should have some word on the Modern Luxury Media auction soon. In the meantime, I’ve been given a clue as to the other bidder involved in the process.

I’m told that the second party is a radio owner that has some publishing assets. At first blush, I immediately thought of Jeffrey Smulyan, chairman and CEO of Emmis Communications Corp. His Indianapolis-based company has radio stations in New York, Chicago and Los Angeles, as well as Bulgaria. EMMIS has owned magazines since 1988 with a portfolio that currently includes Indianapolis Monthly, Los Angeles Magazine and Country Sampler.

The auction of Modern Luxury Media appears to be hitting the home stretch with a winning bidder expected to be announced soon or possibly in the next week, sources said.

peHUB has learned that one of the two remaining bidders is Greenspun Corp., which owns Modern Luxury’s arch rival Niche Media. The identity of the other buyer is unclear although one source said the party is “not in media and not in private equity.”

Greenspun was rumored to be joining forces with private equity firm Irving Place Capital, whose CEO John Howard was once Niche Media investor. Howard said Monday there is “no such thing happening with IPC.”

The auction of Modern Luxury Media is nearing its conclusion, and it looks like the magazine will have the last laugh.

Bids had been expected to come in at around $10 million, but peHUB has learned that the publisher received multiple offers closer to $30 million. Two bidders remain, with a final decision expected later this month.

We’re not yet sure who made the final auction round, or if Modern Luxury founder and ex-CEO Michael Kong remains in the mix. Private equity suitors have included Platinum Equity and Castanea Partners, while Berkery Noyes is managing the process.

Modern Luxury was riding high in 2007 when its then-owner, Shamrock Capital, sold its 60% stake to Clarity Partners. At the time, Modern Luxury, had $16 million of EBITDA, but it has since declined significantly. Currently, it has nearly 30 publications in 13 major markets including Angeleno, Manhattan and Interiors.

Modern Luxury Media may receive bids much lower than the $20 million-plus it is seeking, multiple banking sources tell peHUB.

Second-round proposals for Modern Luxury, known for its upscale regional magazines, were due last week. The magazine publisher still has a brand name and will likely fetch about half its goal, or just over $10 million, one banker said. Interested parties also are expected to assume some liabilities.

It’s worth noting that a source close to the company calls the $10 million price too low, but it’s in that source’s interest to say that.

Private equity is mainly involved in the auction, with bidders including Platinum Equity and Castanea Partners. Berkery Noyes is managing the process.

The auction of Modern Luxury Media, a publisher of magazines focused on lavish lifestyles, has reached its second round, peHUB has learned.

Bidders have ncluded a raft of private equity shops — we’ve heard up to 10 firms expressed interest — and some strategics. Michael Kong, Modern Luxury’s founder and ex-CEO, also is trying to get a proposal in place, but is not viewed as a leading bidder.

It’s unclear what Modern Luxury can fetch. Berkery Noyes is running the auction.

“There was a lot more interest in the business than was anticipated,” a source said.