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Tribune moves closer to bankruptcy exit

Tribune Co. parent company Chicago Tribune will emerge from bankruptcy Monday after four years. | Richard A. Chapman~Sun-Times

Tribune Co., the parent company of the Chicago Tribune, will emerge from bankruptcy Monday after four years. | Richard A. Chapman~Sun-Times

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Updated: July 9, 2012 6:13AM

Ever so slowly, Chicago-based Tribune Co. is nearing the end of its 3½-year journey through bankruptcy, and a ruling could come as soon as Friday.

The owner of the Chicago Tribune, Los Angeles Times and broadcasting outlets across the country heads back to court Friday for the second day of a hearing expected to produce a final ruling on who will control the company.

The hearing before U.S. Bankruptcy Judge Kevin Carey in Wilmington, Del., began Thursday with a session that dealt with mostly technical motions. A longer session on Friday will deal with unresolved issues in the complex case and could overlap into next week. Carey probably will issue a written opinion sometime later.

The judge is expected to approve a Tribune-sponsored reorganization plan that assigns control to primary debt holders led by JPMorgan Chase & Co. and hedge funds Oaktree Capital Management LP and Angelo, Gordon & Co. The plan has been modified to meet objections from Carey, who has said he favors the latest version.

Junior bondholders including Aurelius Capital Management are unsatisfied with a settlement of about $431 million, or a third of their claims, but the bankruptcy case allows them to pursue further payments from former Tribune shareholders and Sam Zell, the real estate tycoon whose debt-laden purchase of the company in 2007 led to the bankruptcy.

Once the judge issues his opinion, Tribune must then head to the Federal Communications Commission for approval to transfer the broadcast licenses to new owners. The approval isn’t a sure thing; the FCC could hear from groups that have fought Tribune in the past over concentration of media ownership.

Tribune would formally exit bankruptcy after the transfers are granted. At that point, a new board would be seated and new executives installed.

It remains be seen what the new owners will do the company. Most analysts believe Tribune will be broken up, causing disruptions and deep job losses. Reports submitted as part of the bankruptcy show Tribune-owned newspapers still operating mostly at a loss, while the broadcast stations, including WGN, are profitable.

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