WILMINGTON, Del. (CN) – The bankruptcy judge for the Tribune Co. ordered the drafters of four reorganization plans to revise their bankruptcy exit plans at a contentious meeting with creditors, who have waited nearly two years to get paid.
During a seven-hour hearing on Monday, U.S. Bankruptcy Judge Kevin Carey presided over a courtroom with bickering creditors of Tribune as they hashed out the particulars of four submitted bankruptcy exit plans and statements that will be sent out for voting once approved by the judge.
“The disclosure statements exceed 400 pages, and that’s just too long,” Carey said to the drafters of the four different plans. He also mentioned, as he did in a previous hearing, that he might ultimately write their disclosure statements himself.
The statements aim to convince creditors to vote for a respective plan on reorganization and repayment of debt.
Having four competing bankruptcy plans at the same time is extremely rare and may be unprecedented. The chaos created by the plans prompted David LeMay of Chadbourne & Parke to quip, “this is like a four-ring circus.”
Most of the objections dealt with the language used in the so-called responsive statements, which are the shorter overviews of the reorganization plans.
Aurelius Capital Management seemed to ruffle the most feathers in its responsive statement because it contained quotes from Marcus Aurelius and inflammatory language pertaining to litigation claims against Tribune Chairman Sam Zell and other insiders.
David Bradford of Jenner & Block, who represents Zell and EGI-TRB, succeeding in getting Judge Carey to make Aurelius delete language that could mislead creditors into believing that the court-appointed examiner had determined that there are meritorious and valuable claims against Zell and EGI-TRB.
Kenneth Klee was appointed independent examiner by Judge Carey last summer to determine if there was a fraudulent transfer in the 2007 takeover of Tribune by Zell and others, which resulted in the company filing for bankruptcy protection less than one year later with $11 billion in debt. His findings derailed Tribune’s single bankruptcy plan and opened the doors for the competing plans now on the table.
All four plans refer to the examiner’s report. At the hearing, some creditors advocated eliminating all references to the examiner’s report, while others wanted no limitations at all. The debate prompted David LeMay of Chadbourne & Parke to say that the “examiner statement is like the Bible, there’s something in it for everyone.”
Tribune’s new plan has the support of JPMorgan, Angelo Gordon & Co., Oaktree Capital Management LP and the committee of unsecured creditors.
Besides Aurelius and Tribune’s plans, the other two bankruptcy plans are sponsored by hedge-fund manager King Street Capital LP and a group of senior lenders who broke with JPMorgan.
Another hearing is set for Dec. 6, during which Judge Carey is expected to approve all four plans for voting. Carey will pick a single plan for Tribune to exit bankruptcy proceedings sometime in early March.