— The confirmation hearings in Tribune Co.'s bankruptcy case ended with a whimper Monday, providing no clue as to when the Chicago-based media conglomerate might finally emerge from Chapter 11 proceedings.
Lawyers made their final arguments for the two competing plans of reorganization now being considered by U.S. Bankruptcy Judge Kevin Carey, wrapping up a confirmation trial that began in March.
But Carey disappointed an expectant Delaware courtroom by delivering no summation statement of his own and giving no indication of when he might issue a decision in the case.
That means he could take weeks or even months to consider the evidence and write up a ruling to either confirm one of the plans or reject them both, leaving Tribune Co. in limbo until then.
"If we get something this summer we should be happy," said one lawyer involved in the process who wasn't authorized to speak publicly.
One development is that Tribune Co. and GreatBanc Trust Co., the trustee for the now-dissolved employee stock ownership plan that was at the center of Tribune Co.'s ill-fated 2007 leveraged buyout, may be on the verge of settling a related federal district court case brought by several former Los Angeles Times employees.
Tribune Co. owns the Times along with the Chicago Tribune, two dozen television stations and other media assets.
The settlement talks, involving charges that the buyout transaction violated federal law under the Employee Retirement Income Security Act of 1974 (better known as ERISA), also involve the U.S. Labor Department, the Internal Revenue Service and insurance companies for Tribune Co. and GreatBanc.
Tribune Co. lawyer Bryan Krakauer of Chicago's Sidley Austin said the talks have been moving forward but may take several weeks to complete. Another source said the complexity of the negotiations, which would produce a payout for Tribune Co. employees from GreatBanc and Tribune Co. insurance policies, has made coming to an agreement a challenge. The insurance policies total about $55 million, but a settlement would likely be less than that.
That's par for the course with anything related to Tribune Co.'s bankruptcy case, which has already dragged on for 2 1/2 years, spawned dozens of related lawsuits in federal and state courts around the country, and produced hundreds of millions of dollars in legal fees.
Few close observers of the case expected Carey to issue a final ruling when the closing statements wrapped up. But many had expressed hope that he would provide some guidance as to which way he was leaning or how long it would take him to make up his mind.
The bankruptcy case centers on a thicket of charges brought by junior creditors that the company's 2007 leveraged buyout led by Chicago billionaire Sam Zell left it insolvent from day one.
One of the competing reorganization plans — supported by the company, the banks and hedge funds that own its senior debt and the Official Committee of Unsecured Creditors — seeks to settle most of those claims by giving junior bondholders about 35 cents on the dollar.
But the junior group, led by hedge fund Aurelius Capital Management, thinks it could get a higher recovery in court and has proposed an all-out litigation plan that would allow the company to emerge while the lawsuits play out.
On Monday, both sides made their final arguments. The senior group, led by lender JPMorgan Chase and hedge funds Oaktree Capital Management and Angelo, Gordon & Co., argued that the settlement offer would deliver a bigger settlement to the Aurelius group than potential litigation. While some of the claims may have merit, the senior group said, any recovery in court would be limited.
Lawyers for Aurelius, however, tried to convince the judge that the claims held plenty of potential. They laid out evidence that company management based the deal on unsupportable financial projections and that the lenders, Zell and management all knew the deal shouldn't be done but moved forward anyway to enrich themselves. Lawyers for Zell and the senior group disputed those arguments.
Carey has said at past hearings that he might find it impossible to approve either plan, which would pitch the case back to square one. Given that amount of doubt on the judge's part, lawyers said he could reject one plan and ask for changes in the other to make it more equitable to all sides.
In any case, most observers assume that since the case has dragged on for so long and touched so many complex legal issues, Carey will want to consider it carefully and possibly write a significant opinion. How long that would take is impossible to predict, but under bankruptcy law, the judge can take as long as he likes.