Judge Junks Tribune Bankruptcy Plans

Nov 2 2011 | 9:07am ET

A federal bankruptcy court judge has rejected not one, but two bankruptcy exit plans for Tribune Co., including one championed by a hedge fund.

U.S. Bankruptcy Judge Kevin Carey in Wilmington, Del., savaged the plans, calling them examples of "an inescapable facet of human character: the willingness to visit harm upon others, even at one's own peril." But Carey was especially critical of the plan backed by Aurelius Capital Management, approving the skeleton of JPMorgan Chase's competing plan and saying the hedge fund's proposal "unfairly discriminates."

But he warned both sides that he'd appoint a trustee to run Tribune unless the company can "promptly find an exit door" from Chapter 11 bankruptcy protection.

That's not likely to make any of the hedge funds, including Oaktree Capital Management and Angelo Gordon & Co., happy: Under both plans, they and other senior lenders were to become the majority owners of Tribune, which publishes eight newspapers, including the Chicago Tribune and Los Angeles Times, and 23 television stations, including outlets in New York, Chicago and Los Angeles.

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