Judge in Tribune bankruptcy case grants stay of reorganization plan

The judge inTribune Co.’s long-running bankruptcy case put a hold on the media company’s reorganization plan a month after approving it.

U.S. Bankruptcy Judge Kevin Carey in Delaware granted a stay Wednesday to allow an appeal by junior creditors — provided they put up a $1.5-billion bond by next Wednesday.

Carey held a hearing last Friday to consider whether to make effective a plan he confirmed last month to hand ownership of the Chicago media company to its senior creditors or put it on hold during an appeal by junior creditors.

The decision to grant a stay could delay Tribune’s emergence from a nearly four-year-long bankruptcy. But the bond, designed to protect creditors during an appeals process that could last for several years, may have raised the financial bar too high for the junior creditors to halt the confirmation.

The appellants indicated during Friday’s hearing that they would be either unwilling or unable to post such a bond. Attorneys representing Aurelius could not be reached for comment Wednesday evening.

Carey also denied a separate motion for a direct appeal to the U.S. 3rd Circuit Court of Appeals in Philadelphia.

Tribune, which owns the Los Angeles Times, KTLA-TV Channel 5, the Chicago Tribune and other properties, has spent more than $400 million on a bankruptcy case that has dragged on since December 2008.

A Tribune bankruptcy consultant Friday testified that incremental legal fees alone would cost the company an additional $113 million during a projected two-year appeals process.

Tribune Chief Executive Eddy Hartenstein said the damage to the company could be far greater if it isn’t allowed to emerge from bankruptcy, even as appellants seek to overturn the reorganization plan.

“It’s an insidious drip-by-drip, day-by-day erosion and diminution of our brand, and of our place competitively in the market,” Hartenstein testified Friday.

rchannick@tribune.com