While Tribune Co. and its senior creditors have hailed the proposed bankruptcy plan as the best solution for concluding the already two year old Chapter 11 bankruptcy case, junior creditors are still feeling slighted by the settlement and the threat of litigation and competing bankruptcy plans remains.
Creditors face a midnight Friday deadline for submitting restructuring plans that would contest a settlement filed Oct. 22 by Tribune Co., its biggest senior creditors and the committee charged with representing the company's junior creditors.
Aurelius intends to file a competing plan, said Mark Brodsky, chairman of the litigious New York hedge fund. So does a group of senior creditors known as the SoCal lenders, one of its lawyers confirmed. Another group of bridge loan lenders represented by Wells Fargo Bank also is considering a filing, although the group's lawyer, Thomas Lauria, of White & Case, said it may end up joining another opposition camp.
The proposed Chapter 11 bankruptcy plan submitted by Tribune Co. has the backing of the bankruptcy mediator and major lenders in the case; but junior creditors argued that they were not given a seat at the negotiating table. It's predicted that several competing bankruptcy plans could be presented. One of those plans proposed could come from Aurelius. Some predict that the Aurelius bankruptcy plan will demand that all of the buyout-related claims be put into a litigation trust, preserving them for future court battles. The Tribune Co. could then exit bankruptcy without having to wait for the outcome of the litigation, which could stretch on for years.