The biggest and most protracted bankruptcy in the newspaper industry is not exactly hurrying to a conclusion, judging by recent court hearings and internal memos from Tribune Co. dealing with the matter.
The latest version of the much-contested Tribune bankruptcy reorganization plan is due for a hearing in Delaware bankruptcy court in May. This is a step forward following a step back in November, when judge Kevin Carey rejected two rival bankruptcy plans presented by the company’s management and a dissident group of note-holders, deeming neither “confirmable.”
The plan put forth by management and creditors offered $431 million to note-holders led by Aurelius Capital Management -- an amount they rejected as too small.
At the same time, Carey let it be known that he favored the basic elements of the management plan, which had the support of creditors, including JPMorgan Chase, Angelo, Gordon & Co., and Oaktree Capital Management, over the one proposed by the note-holders, leading to the revised version now under consideration.
In an internal memo to employees, Tribune’s chief restructuring officer Don Liebentritt held out modest hope that the tortuous bankruptcy (now entering its fourth year) might be resolved sometime in 2012. “While it is tough to predict an exact timetable for Tribune's emergence from Chapter 11, it is certainly possible that we could emerge late in the third quarter of this year," he said.
The Tribune buyout engineered by Sam Zell in 2007 at the height of the credit-bubble proved to be one of the most disastrous deals in the newspaper business, burdening the company with $8.7 billion in debt just as newspaper advertising revenues began a prolonged decline.
Since then, virtually the entire management team appointed by Zell has resigned or been laid off. Since Tribune sought Chapter 11 bankruptcy protection in December 2008, the bankruptcy process has been complicated by numerous lawsuits pitting various groups of creditors and note-holders against each other, as well as the company’s previous and current management, among others.