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.
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.
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.
David McNew/Getty Images
Los Angeles Times building in Downtown LA
I got in just in time today to discover that the Los Angeles Times continues to be a paper where top editors don't last very long anymore. Russ Stanton, who had been the paper's editor since 2007, "will step down," according to the LAT's own story. His successor is Davan Maharaj, currently the managing editor, who's been with the paper for 22 years.
Maharaj is the LAT's 15th editor but its fourth since 2005. What's been abbreviating the tenure of the paper's top editors? Problems with Tribune Company management. In 2005, confronted with cost-cutting demands, former Baltimore Sun editor John Carroll left, later to resurface at Harvard's Kennedy School.
Next up, former New York Timesman Dean Baquet — a Carroll hire — had a famous and by some accounts heroic standoff with Tribune over newsroom cuts. He went down and his by-then sympathetic publisher, Jeffrey Johnson, went with him. Baquet is now back at the New York Times.