April 19, 2012
By: John Clark
After three years spent learning how the bankruptcy process works, the Tribune Company, which is the publisher of notable newspapers like the Chicago Tribune and Los Angeles Times, may finally be nearing the end of its bankruptcy filing.
The judge in the printing company’s bankruptcy proceeding recently resolved a dispute about the manner in which creditors of the company should be paid, which was one of the filing’s final hurdles, according to a report from the Chicago Tribune.
Last week, Kevin Carey, a bankruptcy judge in Delaware determined the order in which the Tribune Company’s creditors who hold unsecured debts would be repaid. A ruling on this issue had been delayed for months as the judge sought extra evidence.
In addition to the order of creditor payments, Judge Carey also ruled that the company’s plan to exit from bankruptcy, which was proposed to the court months ago, does not unfairly discriminate against select creditors.
Of course, this ruling may still be subject to change, and sources expect some creditors to appeal the ruling when Judge Carey is scheduled to officially approve the Tribune Company’s bankruptcy exit plan this June.
In his decision, the bankruptcy judge determined that senior creditors will be repaid ahead of certain other creditors who do are not owed as much money, and have had shorter relationships with the bankruptcy company.
The Tribune Company’s bankruptcy, which was filed in 2008, has created a remarkable amount of drama in bankruptcy court. In 2007, the company was purchased by Sam Zell, who led a controversial leveraged buyout of the company that was worth roughly $13 billion.
One year later, the company filed for bankruptcy, and many creditors reportedly blamed Zell’s poor leadership for its financial demise. The stakes in this bankruptcy filing are considerably high, as the company owes at least $500 million to numerous creditors.
The Tribune Company’s assets are vast, as it owns 23 television stations, a large cable network, and several other major newspapers in addition to the Chicago Tribune and Los Angeles Times.
Last year, the bankruptcy judge dismissed a proposed bankruptcy exit that was offered by the company’s creditors, which may further frustrate these creditors if the current plan is approved this summer.
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