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Judge in Tribune bankruptcy could issue opinion today

Kevork Djansezian/AP

The Los Angeles Times building. Parent company Tribune Co. could begin the process of emerging from bankruptcy this week.

UPDATE: Judge Kevin Carey has issued his opinion. Oaktree, Angelo Gordon & Co., and JPMorgan Chase will now be able move toward assuming full ownership of Tribune's assets, under an accepted plan of reorganization. But Aurelius will fight on. This is from the Chicago Tribune:

Even if Tribune Co. emerges from bankruptcy in short order, the legacy of the Zell deal is likely to live on in the courts for years to come. Under the plan Carey approved, a group of junior creditors led by New York hedge fund Aurelius Capital Management will receive payments of $431 million to settle legal claims related to the buyout, including charges that the deal left the company insolvent from the start.

I reached out to Aurelius' Mark Brodsky for comment, but I haven't heard anything yet.

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The lengthy bankruptcy of the Tribune Co. — it filed in December of 2008 — could be drawing to a close. There have been reports all this week that Judge Kevin Carey will okay a restructuring plan that will end a drawn-out battle between the senior and junior creditors of the company that owns the Los Angeles Times.

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If Eli Broad wants the L.A. Times, he'll need to go through Aurelius' Mark Brodsky

Kevork Djansezian/AP

The Los Angeles Times building. L.A. billionaire Eli Broad is once against interested in buying the struggling newspaper.

Yep, it could be Broad versus Brodsky for the future of the L.A. Times, which is currently embroiled in the never-ending Tribune Co. bankruptcy. The L.A. billionaire philanthropist against the bankruptcy lawyer turned hedge-fund CEO. 

Brodsky's Aurelius Capital Management, based in New York, is fighting hard for its piece of Tribune's liabilities, basically forcing the company's senior creditors, including Oaktree Capital Management, to delay their hopes that they could get the viable parts of the media giant out of Chapter 11, leaving the junior creditors to tussle over the scraps. But Brodsky doesn't play that game, and he's no stranger to pressing his case and pressing it hard.

This can create some controversy. During the bankruptcy of what was left of Washington Mutual after the FDIC sold its banking business to JP Morgan Chase in 2008, Aurelius was accused by a single shareholder of insider trading because the hedge fund, along with three others, wouldn't back a reorganization plan. However, the bankruptcy judge eventually decided to "vacate" a ruling that would have enabled the shareholders to sue the hedge funds, effectively erasing the accusation from the legal record.

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Aurelius Capital Management: The hedge fund that's keeping Tribune in bankruptcy

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Tribune Company, which owns the Los Angeles Times, has been in bankruptcy for...well, years. And according to recent reports, it won't be coming out of Chapter 11 any time soon. So what's the holdup?

Basically, it's two very large lenders versus an incredibly tenacious hedge fund. On one side, we have Oaktree Capital Management and JPMorgan Chase. Oaktree invests heavily in "distressed debt" — it has close to $30 billion of it's more than $80 billion under management tied up in defaulted or defaulting securities. According to Bloomberg, Oaktree along with Tribune's other "senior creditors" hold around $3.4 billion on a total of $8 billion that Sam Zell borrowed to buy Tribune in 2007.

For the record, Zell's buyout took Tribune's total debt to a staggering $13 billion.

When Tribune finally exits bankruptcy, Oaktree will exchange its debt for equity — an ownership stake — in the new company. To do this, they want Tribune's bondholders to effectively take a $500 million payoff, then fight it out in court over whatever is left of the "bad" company while a "good" company can emerge from Chapter 11.

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