New ruling bogs down Tribune bankruptcy process

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A judge ruled Wednesday that creditors of Tribune Co can appeal his approval of a plan that would allow the struggling owner of the Chicago Tribune and the LA Times to exit bankruptcy.

The appeal means a further delay in the messy proceedings that have turned in part on creditors’ ability to sue lenders that financed the Tribune’s $8 billion leveraged buyout in 2007. As Bloomberg reports,Aurelius Capital Management LP and other note holders object to the plan because it will end some of those lawsuits.

U.S. Bankruptcy Judge Kevin Carey noted in his ruling that “it will certainly be difficult to unscramble the egg” if the plan is approved and Tribune exits bankruptcy.

The plan calls for Tribune to transfer its radio and television licenses to a restructured company. At least one competing paper is objecting to the plan on the grounds that it would violates FCC rules on cross media ownership.






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They can appeal if they post a $1.5 billion bond, which they can’t. So in effect the ruling provides only for a theoretical right of appeal. The bond has to be posted by tomorrow or the right to appeal evaporates. No bond will be posted.

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