Tribune Co. creditors will receive about a third of the money they are owed -- plus a stake in a fund that will bankroll buyout lawsuits -- according to its plan filed in U.S. Bankruptcy Court in Delaware.
Filed on deadline late Friday as expected, the bankruptcy plan gives creditors $420 million, or about 33 percent of what they originally had coming. The terms are more generous to bondholders than previous proposals.
The publisher of the Los Angeles Times and Chicago Tribune hopes that its latest plan will appease creditors and allow the company to emerge from bankruptcy, in a nearly-two-year-old case that’s been hampered by legal battles on both sides.
The Tribune’s creditors have until the end of the month to file their responses to Friday’s filing, which also requires approval of the court. The company had already detailed in court that it will cede control to senior loan-holders, including J.P. Morgan Chase, Angelo Gordon & Co. and Oaktree Capital Management LP.
If approved, the plan would be a major step toward ending a deeply troubling period for the 163-year-old company. Also on Friday, Randy Michaels, the company’s embattled chief executive, resigned on the heels of a New York Times report detailing a frat-boy-like atmosphere in the Tribune Co. executive suite.
Read also: 'Frat Boy' CEO Randy Michaels Out at Tribune
The Tribune board voted to replace Michaels with a four-member executive council that will include L.A. Times publisher Eddy Hartenstein.
Last week, U.S. Bankruptcy Judge Kevin Carey extended the deadline for Tribune and its creditors to submit reorganization plans. The change came after creditors told the judge that they needed time to study the Tribune’s plan -- due by Oct. 22 -- before they send in their own proposals. Creditors now have until Oct. 29 to submit their own plans.
"Each of us recognizes the company’s strengths and believes in its future," the new council wrote in a joint memo to staffers Friday. "During the last few weeks the company has drawn a lot of media attention, much of it negative. That coverage has diverted attention from the things that matter most: The quality of our media products, the talent and dedication of our people, and the very real progress that we’ve made over the last two-and-a-half years."
"Now, it is time to move forward and focus on the future," the note continued. "Our business units are in the process of developing their financial and operating plans for 2011 and we are headed into the most important time of the year for our advertising partners. We’re also making progress on resolving our Chapter 11 bankruptcy cases."