The judge overseeing Tribune Co.’s bankruptcy said he may issue his opinion about two competing proposals for reorganizing the newspaper publisher this afternoon.
U.S. Bankruptcy Judge Kevin J. Carey in Wilmington, Delaware, told Tribune’s chief restructuring officer, Donald J. Liebentritt, at a hearing that the opinion the company and its creditors have waited months to see should be available today.
“I am hopeful something will be on the docket before you get to Washington,” Carey told Liebentritt, who said he would be taking a 4:30 p.m. train to the U.S. capital from Wilmington today. Carey didn’t say how he would rule.
Carey, who has presided over the case since it was filed in December 2008, has been asked to choose between plans to reorganize Tribune, which owes creditors about $13 billion and is now worth $6.75 billion, according to court records.
The judge made his comments at the end of a hearing in which he gave creditors permission to get the names of former Tribune shareholders that may be sued for collecting money related to the company’s 2007 leveraged buyout. Unsecured creditors say they plan to sue some of the company’s biggest former shareholders, arguing that the buyout harmed creditors by piling too much debt on the company.
Opposing Creditor Groups
The two plans were backed by opposing groups of creditors. The lenders who funded the $8.2 billion buyout support a plan that would absolve them of most legal responsibility for the transaction.
Pre-buyout creditors, who rank below lenders in repayment priority, backed a plan that would use lawsuits to raise money for them. Those suits would seek to change the repayment priority by moving pre-buyout creditors ahead of the lenders.
Under both plans, New York-based JPMorgan Chase & Co. and the other senior lenders would be Tribune’s majority owners. The Chicago-based company filed for bankruptcy about a year after a buyout led by real-estate billionaire Sam Zell.
While in bankruptcy, Tribune sold its stake in the Chicago Cubs baseball team. Tribune owns eight newspapers, including the Los Angeles Times and the Chicago Tribune, with a combined daily circulation of 1.9 million last year. The company’s 23 television stations include outlets in New York, Chicago and Los Angeles.
The bankruptcy case is In re Tribune Co., 08-bk-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).