U.S. bankruptcy judge Kevin J. Carey has rejected Tribune Co.’s plan for reorganizing the company so that it can emerge from bankruptcy. A rival proposal from Tribune creditors did not pass muster either.
Carey, a judge in the U.S. Bankruptcy Court in Delaware, on Monday issued an order directing Tribune and its creditors to come up with another plan quickly. The next hearing is set for Nov. 22.
Tribune, a media empire that includes newspapers like the Los Angeles Times and Chicago Tribune, as well as more than 20 broadcasting properties, filed for Chapter 11 bankruptcy in December of 2008. That came a year after real-estate tycoon Sam Zell took the company private.
Tribune has issued the following statement: “We are reviewing the judge’s decision and will have no comment until we have finished studying it.”
Carey began his 126-page opinion with a story, “The Scorpion and the Fox.” He said there is no moral to it, but that it reveals an “inescapable facet of human character: the willingness to visit harm upon others, even at one’s own peril.”
He then detailed the many ways in which neither plan could settle a dispute that is now almost three years old, and threatened to appoint a trustee to resolve the case if neither side can reach a suitable resolution.
Under both plans, JP Morgan and other lenders would be the majority owners.
Pamela Chelin contributed to this report.