Published on Saturday, 23 October 2010 15:12
In addition to the excitement of the resignation of their CEO
, yesterday was also the deadline for Tribune Company to file its latest reorganization plan with the US Bankruptcy Court. At the proverbial last minute late yesterday, the new plan to hopefully exit Chapter 11 bankruptcy was filed.
This new plan incorporates the terms which have already been endorsed by the court mediator and its Unsecured Creditors Committee, Oaktree Capital Management, L.P., Angelo, Gordon & Co, L.P., and JPMorgan Chase Bank. Documents attached to the plan highlight of the company's recent cash flow and projected financial performance. Tribune Company is expecting an operating cash flow for full year 2010.
Don Liebentritt, Tribune's Chief Restructuring Officer, said in a statement today: "We are pleased to be able to put before the court and our creditors the previously announced settlement of LBO claims in a plan that maximizes the value of the bankruptcy estates, preserves all stakeholders' legitimate entitlements and enables the company to conclude its bankruptcy proceedings as soon as possible. In addition, we believe this plan has broad support within the senior lender class, including from an ad hoc group of lenders called the Credit Agreement Lenders, which collectively represents approximately $5 billion of Initial and Incremental term Loans -- Oaktree, and Angelo, Gordon, are part of this ad hoc group."
However, even with the backing of some of the major creditors, it does not have the backing of all creditors. Other creditors may file counter plans by next Friday's deadline for doing so. Expected to be among those filing are Aurelius Capital Management and an assembled group called "The Step One Credit Agreement Lenders."
With there still being contentious battling coming from angry, spurned creditors, the Tribune's hope to exit bankruptcy sooner than later may not happen. The messy bankruptcy fighting has been going on for two years.
It also appears that the fighting may spill out of the bankruptcy courts and into federal courts soon. A group of unsecured creditors had officially asked the US Bankruptcy Court to allow them permission to sue Sam Zell, as well as Tribune executives and anybody who had a hand in the possibly-fraudulent 2007 leveraged buyout of the company. Yesterday, US Bankruptcy Judge Kevin Carey ruled in favor of the creditors, allowing them the ability to try and recover damages in a court of law. Due to the statute of limitations, these creditors will have to act quickly. They must file suit before December 7th of this year, which is two years from the time Tribune Company filed for bankruptcy.
Aurelius Capital Management could end up being the largest hurdle for TribCo to clear. The company has a nasty reputation for aggressively attacking to companies in order to regain or even profit from bonds they hold. Aurelius has been buying up Tribune debt and now holds $1.3 billion in senior bonds. Hedge fund company has already said that it will not cooperate with or support any Tribune-offered plan that does not specifically give them what they want. They are more than willing to sue company officers, shareholders and whoever else they can legally go after.
Tribune Company executives are now warning that rejecting their current plan could force them to go into a Chapter 7 liquidation.
According to Friday's filings, Tribune Company claims that it has already spent over $135 million in fees and costs directly related to the bankruptcy and the company's struggle to emerge from it.
The Chicago-based Tribune Company is the country's biggest media corporation in bankruptcy. It filed for bankruptcy in December 2008, less than one year after real estate developer Sam Zell led a more than $8 billion leveraged buyout of the media giant.
Tribune Company owns 23 television stations, 13 newspapers, various magazines, one radio station and many other websites and companies. Locally, among the company's properties include the Chicago Tribune, RedEye, Hoy, Chicago Magazine, WGN-AM, WGN-TV, CLTV, and WGN America.