Two restructuring plans move forward in Tribune bankruptcy case
Tribune Co. said Friday that the long-awaited creditor vote in the Chicago media company’s 26-month-old bankruptcy case would allow two competing restructuring plans to move forward toward confirmation hearings scheduled for March 31.
The vote provided no surprises. Each plan won support from the creditor alliance that proposed it and suffered rejection from the other side.
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 voted overwhelmingly for a plan proposed by Tribune Co., hedge funds Oaktree Capital Management and Angelo Gordon & Co., and banking giant JPMorgan Chase & Co., the media company said.
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.
The plans differ on how they would apportion ownership of Tribune among the creditor groups. The plans also spell out different ways of handling potential liabilities stemming from litigation over Tribune’s ill-fated 2007 leveraged buyout.
Tribune owns the Los Angeles Times, the Chicago Tribune, KTLA-TV Channel 5 and other media properties.
A notable holdout on either plan, sources said, was a unit of Equity Group Investments, a firm run by Tribune Chairman Sam Zell, which is a creditor by virtue of a $225-million subordinated note pledged to it by Tribune as part of the buyout.
An attorney for Equity Group couldn’t be reached for comment. The firm, which would be vulnerable to litigation under both plans, has argued in court that the plans should contain language noting that an independent examiner in the case found no fault with Zell.
