Friday, September 29, 2023
Courthouse News Service
Friday, September 29, 2023 | Back issues
Courthouse News Service Courthouse News Service

Tribune Creditors Ready|for Bankruptcy Plan Vote

WILMINGTON, Del. (CN) - The judge handling Tribune Co.'s bankruptcy case said he will approve four different reorganization plans for the company by Wednesday so creditors can make thier picks.

Voting on the four proposals is set to begin on Dec. 22, and Judge Kevin Carey will consider the creditors' selection at a hearing scheduled for early March, when he chooses a plan to guide Tribune out of bankruptcy.

Those who drafted the various plans will first have to tweak their disclosure and responsive statements to meet Carey's orders.

Aurelius Capital Management received the strongest rebuke from the bankruptcy judge for failing to properly adhere to orders from the previous week.

"This is a process I will not allow to get out of control," Carey told Aurelius' representative, Daniel Golden of Akin Gump, at a hearing Monday. "One way is for parties to listen to me the first time."

Aurelius drew the remark after including a letter by its chairman, Mark Brodsky, in its responsive statement.

"This is just disclosure," Carey said at the hearing. "I shudder to think at what's ahead."

Carey said the letter must go because it contradicted instructions from the previous hearing that statements should be of a moderate tone.

Attorney David LeMay, who represents the committee of unsecured creditors, took issue with various aspects of the letter, including its tone and references to the committee suddenly deciding to back Tribune's reorganization plan after concessions were made to get releases for senior lenders from lawsuits involving the company's leveraged buyout.

Tribune, publisher of the Chicago Tribune and the Los Angeles Times, filed for bankruptcy protection just a year after the 2007 leveraged buyout led by Sam Zell and financed by JPMorgan and other senior lenders.

Those lenders, including Angelo, Gordon & Co and Oaktree Capital Management, have joined Tribune in support of its bankruptcy plan.

The committee of unsecured creditors is also backing Tribune's plan even though it has filed adversary claims against the senior lenders and others on behalf of Tribune.

Carey ruled earlier in the proceedings that Tribune could not sue its senior lenders when they are co-sponsoring its reorganization plan.

Allegations in the adversary suits relate to claims of a fraudulent transfer by senior creditors who had reason to know that the debt they were piling onto Tribune would leave the company insolvent.

Some of the bankruptcy plans, such as the one submitted by Aurelius, include provisions to preserve legal claims against the lenders, Zell and others who benefitted from the leveraged buyout that left Tribune $11 billion in debt.

At the hearing Monday, Tribune also asked Carey to permit discovery of former chief executive Randy Michaels, who the company says wiped data and e-mails from his company laptop and phone.

A forensic examination could not retrieve anything from the laptop, and Michaels told Tribune "that he had downloaded a program from the internet called 'Eraser' to wipe his drive," according a motion Tribune filed on Friday.

The forensic examiner did recover 15 sensitive e-mails from Michaels' smart phone, according to the filing. Tribune also said it is searching for copies of Michaels' e-mails on its servers, and has already recovered a back-up tape from September 2009 that will restore Michaels' files.

Michaels resigned from Tribune following a scathing New York Times article in October that said the venerable Tribune "came to resemble a frat house, complete with poker parties, juke boxes and pervasive sex talk" under Michaels' leadership.

Categories / Uncategorized

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.