In a 126-page decision, Delaware's chief bankruptcy judge, Kevin Carey, dismissed exit plans from both the Tribune Co. and its noteholders. “Neither the [company plan] nor the noteholder plan is confirmable,” he wrote. “I am uncertain, at this point, what steps the debtors or other parties may take as a consequence of this decision.”
The judge did, however, make it clear that he favored the plan put forth by the Tribune Co. and its lenders, including JPMorgan Chase, Angelo, Gordon & Co., and Oaktree Capital Management. Their plan had offered a settlement payment of $431 million to the company’s noteholders, led by hedge fund Aurelius Capital Management, which rejected the plan in favor of its own. The Tribune Co.’s settlement “should be approved because it is fair, reasonable, and in the best interest of the Debtor's estates,” Carey wrote.
If the Tribune Co. and its lenders can address certain issues that caused Carey to reject their plan, he said, it could be approved. But if the media company and its lenders are unable to settle on a viable exit plan, Carey warned that he would be forced to appoint a bankruptcy trustee to resolve the case.