Revised plans presented at Tribune hearing

By Associated Press
Posted April 12 at 6:54 p.m.

A hearing to determine the fate of the Tribune Co.’s proposed reorganization plan resumed Tuesday with attorneys for Tribune and attorneys for noteholders who have submitted a competing plan continuing to squabble over technical issues. The judge again signaled his desire for a conclusion to the Chapter 11 case, which has dragged on for more than two years.

Tribune owns the Chicago Tribune, Los Angeles Times, other newspapers and several radio and TV stations. It sought bankruptcy protection after a 2007 leveraged buyout engineered by billionaire developer Sam Zell saddled the company with unsustainable debt.

Tribune’s plan would leave the company in the hands of JPMorgan Chase and other holders of loans that financed the buyout, and would shield the lenders from lawsuits. A competing plan by a group of noteholders would provide a smaller upfront recovery for creditors in order to fund lawsuits over the buyout.

Both sides revised their plans before Tuesday’s hearing after Judge Kevin Carey indicated last month that he might not approve either proposal.

Tribune’s revised plan would give the noteholders a combination of cash, new equity and debt, or cash only. The change would increase the recovery for the objecting noteholders to $509.5 million from $431 million, according to Tribune.

The company also agreed to drop a provision in its plan that would have shielded Tribune shareholders who cashed out in the first phase of the buyout from lawsuits. Tribune said the noteholders could receive an additional $205 million from lawsuits, bringing their total recovery to more than $714 million.

Under the revised noteholder plan, the initial distributions would be equity in the reorganized company.

Carey will hear from parties other than the plan proponents later this week. Attorneys will present post-trial briefs next month, and Carey said Tuesday that he likely will hear closing arguments in early June.

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