Judge OKs Tribune reorganization plan; bankruptcy end nears

By Michael Oneal

July 23, 2012 12 AM PT

The judge in Tribune Co.’s bankruptcy case confirmed a plan Monday to transfer ownership of the Chicago media company to a group of senior creditors led by Oaktree Capital Management, a Los Angeles investment fund.

The judge’s order, which was expected, will set in motion a process that will likely allow Tribune to emerge from bankruptcy later this year.

And it will allow the Federal Communications Commission to move forward on the company’s application to transfer its TV and radio broadcast licenses to the new owners — the last big hurdle in a case that has dragged on for 3½ years.

The company owns the Los Angeles Times, KTLA-TV Channel 5, the Chicago Tribune, WGN television and radio stations, and other media properties.

Tribune also will be able to accelerate work on other administrative and financial matters that need to be completed before it can emerge from bankruptcy. Those include reshaping its corporate structure and obtaining $1.1 billion in new debt financing and a $300-million line of credit.

Junior creditors led by New York investment fund Aurelius Capital Management have said they plan to appeal the decision, which was issued Monday in Delaware by U.S. Bankruptcy Judge Kevin Carey. But few experts expect appeals to gain traction because of the careful way Carey fashioned his confirmation opinion.

Instead, junior creditors likely will shift their attention to a federal District Court in New York where they are suing 35,000 former Tribune shareholders who were cashed out in the company’s 2007 leveraged buyout, as well as Sam Zell, the deal’s architect, and certain current and former Tribune directors and officers.

Sources said the members of new ownership group, which also includes distressed-debt investor Angelo, Gordon & Co. and lender JPMorgan Chase & Co., are still mulling candidates for board seats and for chief executive, and have yet to set a clear game plan for what to do with their new investment.

Carey’s confirmation decision eliminates much uncertainty surrounding the case, which should make it easier for the new owners to organize themselves in preparation for the company’s emergence.

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