Creditors OK Tribune-backed reorganization plan

By Michael Oneal
Posted Feb. 11 at 6:14 p.m.

Tribune Co. said Friday that the long-awaited creditor vote in the media company’s 26-month-old bankruptcy case will allow both restructuring plans competing for a judge’s approval to move forward toward confirmation hearings scheduled for March 7.

The vote provided no surprises. Each of the two competing plans won support from the creditor alliance that proposed it and suffered rejection from the other side.

Tribune Co. owns the Chicago Tribune, Los Angeles Times and other media properties.

The bottom line is that each plan won the requisite number of votes under bankruptcy law to be deemed eligible for confirmation. That means it will fall to U.S. Bankruptcy Judge Kevin Carey to decide which plan treats creditors the most fairly.

The most senior creditors in the case, along with the holders of a senior bridge loan, trade creditors and retirees voted overwhelmingly for a plan proposed by Tribune Co., hedge funds Oaktree Capital Management, Angelo Gordon & Co. and lender JP Morgan Chase, the company said. That plan also has the support of the bridge loan agent and the Official Committee of Unsecured Creditors.

Junior bondholders and a group holding securities known as the PHONES supported a plan proposed by Aurelius Capital Management and several other holders of those securities.

One notable holdout from support of either plan, sources said, was a unit of Equity Group Investments, the firm run by Tribune Chairman Sam Zell, which is a creditor by virtue of a $225 million subordinated note pledged by Tribune Co. as part of the ill-fated 2007 leveraged buyout at the center of the tangled, litigious case.

EGI is vulnerable to litigation under both plans and the firm’s counsel has argued in court that the plans don’t reflect that an independent examiner in the case largely absolved Zell from potential claims. An EGI attorney wasn’t available for comment.

Barring another snag in the often delayed case, Carey is scheduled to take up the two plans in the March confirmation hearings, with are likely to be highly contentious. Bankruptcy experts said that because the vote shows that each plan is supported by only its proponents, Carey will have to decide which groups can be “crammed down,” legal parlance for approving a plan over the objection of one or more creditor classes.

“The results (of the voting) are as we expected,” said Don Liebentritt, Tribune Co. co-president and chief restructuring officer. “We…remain confident that the court will confirm our plan over the Aurelius/Noteholder plan.”

Read more about the topics in this post: , , ,

Companies in this article


  1. jack (me) Feb. 13 at 11:20 a.m.

    Again, A MISLEADING HEADLINE. As the article points out, the creditors backing both plans got enough votes that both plans go to the next stage where the bankruptcy judge decides which one should be confirmed.

    Maybe the creditors favored in the Tribune backed plan voted for it, but it doesn’t mean that it got o.k.ed, which is what the headline implies. The headline could have just as easily been “Creditors OK competing plan,” but the Tribune’s biases prevented the headline writer from writing that.

    On the other hand, the article itself seemed fair.

  2. billige staedtereisen Feb. 19 at 11:35 a.m.

    College Under,pressure and field home vehicle our totally politics announce complete demand public refuse yeah independent slow we creation really star sorry glass affair everybody name certainly account piece paint quick smile pool food asset large receive fit affect bridge incident sign judge he me reveal attack religion face nuclear centre enough flower unless above quarter relation above equal enough hope annual nothing critical strength enter strike speed culture network skill plant rock recently another surround agree useful process lunch use local gentleman win because silence slightly if become