Tribune Co. creditors lost their bid to halt the newspaper chain’s plan to exit bankruptcy without first posting a $1.5 billion bond.
The decision by U.S. District Judge Gregory M. Sleet means noteholders must post the bond by Aug. 29 if they want to temporarily prevent the company from exiting bankruptcy while they appeal its reorganization plan.
Sleet, in Wilmington, Delaware, found that a bankruptcy court ruling last week that required the bond “was appropriate.”
Aurelius Capital Management LP and other creditors had sought to overturn a decision by U.S. Bankruptcy Judge Kevin Carey that required the bond to protect Tribune lenders from any delay stemming from an appeal of the exit plan.
On Aug. 22, Carey gave Aurelius and other Tribune noteholders the chance to temporarily halt the television and newspaper company’s exit from bankruptcy, if they agreed to post a $1.5 billion bond.
Aurelius and other holders of Tribune’s oldest debts say Carey erred in approving Tribune’s reorganization plan and a related legal settlement. That settlement ended some lawsuits against lenders that financed the more than $8 billion leveraged buyout of Tribune in 2007.
Tribune, based in Chicago, owes creditors about $13 billion. The company is valued at more than $7 billion, Tribune said in court papers.
Tribune owns the Los Angeles Times, the Chicago Tribune and television and radio stations around the country. Without a temporary halt to the reorganization plan, Tribune will be free to move to the next phase in the bankruptcy: winning approval from federal regulators to transfer its radio and television licenses to the proposed new owners.
Tribune officials have said the company will be able to exit bankruptcy this year if federal regulators approve the reorganization plan and the license transfers.
The case is In re Tribune Co., 08-bk-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).
-- Editors: Fred Strasser, Glenn Holdcraft