CHICAGO — The judge in Tribune Co.'s bankruptcy case rejected two competing plans for reorganizing the company Monday, leaving the Chapter 11 proceeding unresolved after nearly three contentious years in court.
In a 126-page opinion, U.S. Bankruptcy Judge Kevin Carey said neither plan was confirmable under the bankruptcy code and threatened to appoint a bankruptcy trustee to resolve the case if the company and its warring creditors can't come up with a viable solution soon.
Even as he rejected both plans, however, Carey said the one proposed by Tribune Co. and a group of senior creditors, including Oaktree Capital Management, Angelo, Gordon & Co. and JPMorgan Chase would have a better chance of confirmation if it were altered to meet his objections.
Carey said the competing plan proposed by Aurelius Capital Management and a group of junior bondholders was not as feasible as the senior creditors' proposal because it depended on a "highly speculative" litigation trust to resolve the many legal issues swirling around the case. He also said voters overwhelmingly favored the plan proposed by the senior creditors.
Both Aurelius and Tribune Co. said they needed more time to study the decision before commenting.
Although he failed to provide a specific roadmap, Carey made clear his resolve to wrap up the case soon.
Carey said that "the court is resolute that if a viable exit strategy does not present itself with alacrity" he will consider whether to appoint a trustee to resolve the case, even if it creates more delay.
"The debtors must promptly find an exit door to this chapter 11 proceeding," Carey wrote.
Chicago-based Tribune Co. is a partner in McClatchy-Tribune News Service and is the parent of the Chicago Tribune, the Los Angeles Times and other media properties.
Michael Oneal writes for the Chicago Tribune.