Published on Wednesday, 11 April 2012 09:07
Chicago-based media giant Tribune Company is still scheduled to have a judge rule at a hearing on June 7th for a reorganization plan to begin its exit from its long-standing bankruptcy. However, a ruling this week now makes the June 7th ruling more likely and an end of the bankruptcy seem more like a reality.
Monday, U.S. Bankruptcy Judge Kevin J. Carey issued a ruling which made it completely clear the order in which creditors will receive distributions from the two trusts once the company is reorganized and exits bankruptcy. In rulings last year, Judge Carey left this issue up in the air, as he needed more evidence to rule one way or another. This now clarifies his previous rulings, leaving little doubt how unsecured creditors will see repayment.
According to the ruling, senior noteholders will be repaid first, before the "Phones" junior notes -- the securities in the amount of $759.3 million, according to Judge Carey.
The very last in line to receive repayment is Sam Zell himself. The Chairman of Tribune Company and the man most responsible for the bankruptcy itself had been seeking to reclaim money also. His EGI Notes will only be repaid after the other creditors receive what they are allowed.
In an attempt to regain even more money, Zell still has two lawsuits pending
against Tribune Company shareholders, who agreed to accept Zell's own plan for purchasing the company, which sent it spiraling into bankruptcy. For now, all of the lawsuits which have been filed against former Tribune Company shareholders, including Zell's lawsuits, have been placed on hold until after the bankruptcy hearings have concluded.
Among the other notable decisions in this week's 50 page ruling, the judge also ruled that senior noteholders will not be receiving post-bankruptcy interest payments before the "Phones" notes holder begin to receive their payments.
The June 7th hearing is expected to finally have the U.S. Bankruptcy Court approve a plan of reorganization for Tribune Company, after years of fighting between creditors. The then-reorganized corporation, whose primary ownership will become the senior creditors, will have to be approved by the Federal government before it officially exits bankruptcy -- a move which could take a few additional months.
Chicago's Tribune Company is the country's biggest media corporation in bankruptcy. It filed for bankruptcy in December 2008, with approximately $13 billion in debt, just one year after real estate developer Sam Zell completed the $8.2 billion leveraged buyout of the corporation.
Tribune Company owns thirteen newspapers, various magazines, twenty-four local television stations, two national television networks, one radio station, as well as numerous other websites and companies. Locally, among the company's bigger properties include the Chicago Tribune, RedEye, Hoy, Chicago Magazine, Naperville Magazine, WGN-AM, WGN-TV, and CLTV.