Wilmington, Del. (CN) – A federal judge granted the Tribune Co. the exclusive right to proceed with its bankruptcy plan, barring a group of creditors from filing an alternative reorganization plan.
The Tribune’s plan, unveiled Monday, would allow the company to stay in charge of its media outlets and would wipe out the company’s crippling debt, handing 91 percent ownership to a group of senior lenders that includes JPMorgan Chase & Co. and Angelo, Gordon & Co.
But two groups of secured and unsecured creditors protested pivotal parts of the plan, one group calling it “internally inconsistent and unfair.”
The objecting secured creditors, led by distressed-bond investor Oaktree Capital Management, attacked the proposal to carve out $451.4 million of Tribune’s purported $6.1 billion value to pay off junior creditors, who have $1.2 billion in claims.
During Tuesday’s hearing, Wilmington Trust Co. and other junior bondholders objected to granting immunity to those involved in the $8.2 billion leveraged buyout of the company in 2007, engineered by Sam Zell and a group of lenders.
U.S. Bankruptcy Judge Kevin Carey agreed with bondholders’ call for an examiner to broaden the settlement and independently assess the various legal claims, including the fraudulent conveyance charge over the leveraged buyout of the company.
A hearing on the bondholders’ request is set for April 22.