WILMINGTON, Del. (CN) – The Tribune Co. was given another week to make changes to a disclosure statement before voting can take place on the company’s reorganization plan. At a hearing on Thursday, Judge Kevin Carey refused a request by a group of disgruntled creditors to further delay the vote to allow an independent examiner time to submit his report on legal issues over the 2007 leveraged buyout of the company.
That report is due by mid-July.
Meanwhile, the disclosure statement will be sent to creditors with the required changes as well as a ballot for the voting. Carey said the changes must include additional information submitted by critics of the plan in the form of three-page letters, stating what makes the settlement unfair as it relates to the 2007 leveraged buyout that left the company insolvent. The letters must also include details on the source of the funds used to finance the deal.
Voting must be concluded by July 30 so Carey can consider the results before making a decision over whether to approve the Tribune Co.’s reorganization plan.
Senior debtors who loaned the company $8.7 billion want to run the multi-conglomerate media company when it emerges from bankruptcy reorganization. Junior debtors are the main roadblock to that outcome, given that they have $3.6 billion in the company and will more than likely get next to nothing out of it unless they can successfully contend that the leveraged buyout was fraudulent.
Objections from many of these junior creditors were filed prior to the May 20 hearing; one characterized the disclosure statement as a “non-disclosure statement.”
They were not the only objectors to Tribune’s reorganization plan. A previously silent contingent from the senior creditor group expressed anger over the limited information included in the disclosure statement related to the leveraged buyout, which was the source of most if not all of the objections.
The debtors have until mid-August to win approval for their plan, although there are many contingent factors and opposing camps that must be reconciled before that milestone is met.