Bankruptcy judge urges Tribune Co. and creditors to keep working toward a settlement
U.S. Bankruptcy Judge Kevin Carey on Tuesday asked the bickering parties in the Tribune Co. Chapter 11 case to continue trying to settle their differences.
But he also said he would spend most of the next month coming up with a decision that would resolve the case, although he made no promises about when he would be finished.
Tribune Co. — the Chicago parent of the Los Angeles Times, KTLA-TV Channel 5, the Chicago Tribune and other media properties — and its creditors have spent the last 21/2 years trying to settle claims stemming from the company’s 2007 leveraged buyout. Carey has repeatedly pushed them to resolve the disputes consensually. He appointed a mediator to help the process.
Those efforts have produced a one-sided settlement among Tribune Co. and its senior creditors that doesn’t include the company’s biggest junior creditor, Aurelius Capital Management, a New York hedge fund. That leaves Carey to wade through complex legal issues to choose between two competing plans.
On Tuesday he said he recognized that “sometimes you need a decision from a judge,” and promised to produce one as quickly as possible. But he also said that although both sides are far apart, “they still have good reason to continue their discussions” toward a consensual resolution.
What seems more likely, however, is that they will continue plans to sue each other.
The main purpose of the hearing was to clear the way for the consolidation of 52 individual lawsuits in more than 20 state and federal courts that have been brought by Tribune Co.’s junior creditors against the various beneficiaries of the $8.2-billion buyout, including the company’s former shareholders and Sam Zell, the Chicago billionaire who led the buyout and is Tribune Co.’s chairman.
Those cases have been effectively stayed for the time being by an order signed by Carey in the bankruptcy case. But the plaintiffs plan to seek what’s known as a multi-district litigation, which would bring them together under one federal judge.
