A Chicago flag and a NATO flag fly over the Michigan Avenue bridge near the… (Scott Olson/Getty Images )
The federal judge in Tribune Co.’s long-running bankruptcy case said in a memorandum Friday that he would approve a reorganization plan proposed by the company and its largest creditors, overruling objections brought by numerous parties.
Approval of the plan would begin the process of allowing the company -- parent of the Los Angeles Times and KTLA-TV Channel 5, among others -- to exit bankruptcy after 3 1/2 years.
Tribune's plan would transfer ownership of the company to a group of hedge funds and banks. Once U.S. Bankruptcy Judge Kevin Carey issues his final order, the new owners would have to secure waivers from the Federal Communications Commission to operate broadcast stations and newspapers in several markets, including Los Angeles and Chicago.
The approval of Tribune's restructuring under Chapter 11 would represent the beginning of the end of a case that has left the company in limbo since December 2008.
Tribune filed for bankruptcy less than a year after Chicago billionaire Sam Zell took the company private, saddling it with $13 billion in debt just as the Great Recession began. Since then, Tribune has lost thousands of employees, endured an embarrassing management crisis and, like all traditional media companies, struggled to adjust to a new marketplace in which people increasingly get their news from computers and mobile devices.
The restructuring plan that Carey said he would approve would put the company in the hands of a group of senior creditors led by Oaktree Capital Management, Angelo Gordon & Co. and JPMorgan Chase & Co. And it would launch a fresh period of uncertainty for Tribune: The new ownership group would move to appoint its own board of directors and decide what to do with the company's media properties, which include 23 broadcast TV stations and eight daily newspapers.
Many experts predict Oaktree and its partners will look to break up the company. In Los Angeles, billionaire Eli Broad has expressed interest in forming a group to buy The Times.
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Tribune bankruptcy judge may rule for company's plan this week