| WILMINGTON, Del., June 7
WILMINGTON, Del., June 7 Tribune Co's long
bankruptcy entered what is expected to be the final stage on
Thursday, although the media company still faces months of
regulatory clearances to transfer broadcast licenses to new
The owner of 23 television stations and publisher of the
Chicago Tribune and Los Angeles Times asked a Delaware
bankruptcy court to approve a reorganization plan to pay off
creditors. The company failed a year ago in an attempt to end
its Chapter 11 case because of creditor disputes, but this time
success appears much more likely.
"Here we find ourselves back at the river's edge," Tribune
lawyer James Bendernagel, of law firm Sidley Austin, told the
court as the confirmation hearing began. "This time the river's
quite a bit narrower."
Tribune Co, which also owns a cable network and several
other large newspapers, was acquired in 2007 by financier Sam
Zell in a $13 billion leveraged buyout.
The buyout, which Zell has called the "deal from hell,"
coincided with a U.S. recession and a major downturn in
newspaper advertising and readership as consumers flocked to the
Internet. Less than a year after the deal closed, the company
filed for bankruptcy, and noteholders have blamed Zell and the
buyout for their losses.
The bankruptcy plan would turn over ownership to holders of
the company's loans, a group that is led by JPMorgan Chase & Co
and hedge funds Oaktree Capital Management LP and
Angelo, Gordon & Co. They will appoint the company's
On a conference call with the legal teams on Wednesday, U.S.
Bankruptcy Judge Kevin Carey discussed when the reorganization
would become effective and procedures for an appeal -- giving
the impression that confirmation was likely.
The confirmation hearing is expected to end on Friday and
Carey is expected to issue his ruling at a later date.
A spokesman for Tribune declined to comment.
The company has lingered in bankruptcy as its lenders have
waged war with junior creditors, led by the Aurelius Capital
Management hedge fund, which hold the company's notes.
In rejecting last year's reorganization plan, Carey approved
a settlement that provided about $500 million to the company's
noteholders, leaving those noteholders will fewer lines of
The noteholders' objections with the current plan are
largely limited to classifications of claims and processes for
paying attorneys' fees.
Once its bankruptcy plan is confirmed, Tribune can formally
seek approval from the Federal Communications Commission to
transfer its broadcast licenses to the new owners. That process
could take months, Tribune's lawyers have said.
The company needs FCC approval before it can exit Chapter
"This has been a difficult, contested case from the
beginning, certainly a function of the 2007 deal, a difficult
industry, and the questions about valuation in a changing
market," said Christopher Simon, a Wilmington, Delaware
bankruptcy attorney with Cross & Simon who represented unions in
Tribune's business is on a bit of an upswing. In February,
investment bank Lazard estimated the company was worth $7.372
billion as its broadcasting business continues to increase in
value more quickly than the newspapers deteriorate. Lazard said
the company was worth $6.75 billion in October 2010, according
to court documents.
While Tribune has overhauled management and sold the Chicago
Cubs baseball team during its bankruptcy, it is expected to
consider selling assets in earnest after the new owners take
The market for newspapers has shown some signs of life, led
by Warren Buffett's Berkshire Hathaway Inc. The
conglomerate bought the majority of Media General Inc's
papers for $142 million in cash last month.
Ending its bankruptcy will not end the litigation stemming
from the buyout.
The company's creditors are trying to increase their
potential recovery by suing those who had a role in the buyout
but who did not contribute to the settlement. That includes the
thousands of shareholders who sold their Tribune stock into
Zell's buyout, along with companies that advised on the deal.
A multidistrict litigation is being organized in Manhattan's
federal court to coordinate those lawsuits, which are seeking
billions of dollars.