Tribune Co. is working closer to emerge from their bankruptcy filing, but some creditors are still unhappy with their latest reorganization plan. The currently proposed plan would help Tribune Co. to emerge from Chapter 11 protection by the end of the year.
The plan is the result of some compromise between Tribune Co.’s major creditors, according to Bloomberg. Lenders like JPMorgan and Centerbridge Partners LP agreed not to sue each other in exchange for shares of Tribune Co. stock. The bankruptcy courts ruled Tribune could press ahead with its plan, while also taking steps to address concerns of the unhappy creditors.
One group of lenders considers the plan unfair, and is asserting that they should have the opportunity and the right to provide an alternative.
According to Reuters, several dozen lenders filed claims in the U.S. Bankruptcy Court in Delaware. These lenders hold more than $3.6 billion in claims. The claims argue that the agreement that Tribune Co. made with some of its creditors was “premature and misleading.”
The group expressed to the court their attitude that the agreement between the other lenders and Tribune Co. was “dead on arrival” if they did not provide their support. The group of lenders also asked the bankruptcy judge in the case, U.S. Bankruptcy Judge Kevin Carey, to propose an alternative plan that was more fair in its view.
The Tribune's bankruptcy reorganization has now been going on for more than a year. The company, which owns the Chicago Tribune newspaper, the L.A. Times newspaper, as well as several other publications and television stations, decided on filing bankruptcy in December 2008, not long after Sam Zell purchased the company. Formerly the owner of the Chicago Cubs baseball franchise, Tribune Co. sold Wrigley Field and the franchise earlier in the year to Tom Ricketts and the Ricketts family, founders of Ameritrade, for $845 million.
In the opinion of the disgruntled set of lenders, the current plan awards the other creditors some $400 million at their expense. The group also requested that the judge turn down Tribune Co.’s request to extend the period of time that it’s allowed to file a reorganization plan without the inclusion of creditors. The request is that this period be extended to the end of April. The spokesman for Tribune Co. did not comment on the complaint.
The group that is lobbying the complaints claims to include hedge funds that make up 42 percent of the almost $9 billion in claims under the 2007 secured credit agreement, according to Reuters. Members of the group include Goldman Sachs Loan Partners and Oaktree Capital Management.
The Tribune Co. filing agreement would potentially settle claims that resulted from the buyout back in 2007. This leveraged buyout was worth $8.2 billion.
The reorganized Tribune Co. is estimated to be worth a little over $6 billion. What Reuters calls “senior credit facility lenders” would control 91 percent of this new version of the company. The upset group of lenders considers what would result from this to be a reorganization that would reward insiders.
“This is a ‘settlement’ made possible with ‘other people’s money’—specifically that of the credit agreement lenders and other current holders of credit agreement claims left holding the bag,” the disgruntled lending group said.