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Published on Wednesday, 02 February 2011 19:26
In late October, Tribune Company submitted its plan to pay off its major creditors, reorganize its corporate structure and exit bankruptcy. A week later, on October 29th, three groups of creditors, each with their own ideas on how the Tribune money should be divided up before exiting bankruptcy,
filed their own plans. In mid-December, one of the four plans filed
had been voluntarily withdrawn. This week, another rival plan withdrew, leaving only two possible plans left.
The group primarily made up of King Street Capital L.P. and Marathon Asset Management L.P., that has recently been going by the name of Bridge Lenders, withdrew its plan and then threw its support behind the Tribune's plan, which looks to settle mainly with the larger lenders of JPMorgan Chase & Co., Oak Tree Capital Management and Angelo, Gordon & Co. Helping sway the Bridge Lender's decision to now back Tribune Company's plan after many months of fighting against it, is the fact that Tribune Company will be giving Bridge Lenders a reported $64.5 million cash settlement, along with covering Bridge Lenders' legal fees.
The only plan that is opposing the TribCo plan is one filed by Aurelius Capital Management, L.P., which is seeking to recover billions of dollars from lenders who they feel knew that Sam Zell planned on bankrupting the company with his leveraged buyout. Mark Brodsky, Chairman of Aurelius Capital Management said in October, after filing his company's plan: "Tribune was bankrupted by a transaction that the court-appointed Examiner found to have been fraudulent. The Company has remained in bankruptcy far longer than necessary, because of attendant conflicts of interest and attempts to cover up. The Pre-LBO Bondholder Plan offers a surer and quicker path for Tribune to emerge from bankruptcy while preserving a level playing field for resolving all LBO-related litigation afterward."
Aurelius Capital has a reputation for being extremely difficult to negotiate with in bankruptcy cases. The firm bought out large portions of smaller creditors' debt, with the intent of making large profits from a settlement with Tribune Company. If their reputation holds true in this case, they will fight for every last dollar that they can legally drain from the proceedings.
The U.S. Bankruptcy Court has scheduled five days in March to decide on one of the two plans. At that point, the decision on how billions of dollars will be divided up to the many creditors, how Tribune Company will be structured going forward, and how it can quickly exit bankruptcy will be made clear.
The Chicago-based Tribune Company is the country's biggest media corporation in bankruptcy. It filed for bankruptcy in December 2008, with approximately $13 billion in debt, less than one year after real estate developer Sam Zell completed a more than $8 billion leveraged buyout of the media giant.
Tribune Company owns twenty-three television stations, thirteen 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.
