Tribune Co. moves forward with Chapter 11 bankruptcy

Area residents may have wondered what would happen to the Tribune Co. when it entered bankruptcy over three years ago. After a bankruptcy judge issued a written opinion in the case today, it appears that the parent company of the Chicago Tribune will be able to emerge from Chapter 11 bankruptcy before the year is out.

The opinion lent the court's approval to various aspects of the company's bankruptcy plan. In particular, Tribune Co. will begin securing additional financing to continue its business operations. According to the plan, it will need a line of credit worth $300 million as well as over $1 billion in debt financing.

The plan also resolved the issue regarding who would obtain ownership of the company before it left the bankruptcy process. According to the plan, a number of senior creditors will take ownership of the company together. While the group of creditors, which includes JPMorgan Chase, have not put forward business blueprints for the company yet, they are reportedly deciding on which executives to hire and whom they will nominate as potential board members.

While the senior creditors were pleased with the bankruptcy court's opinion, the same cannot be said of the junior creditors. As their name suggests, junior creditors are lower in priority than senior creditors on the list of entities that get paid in a bankruptcy. They indicated that they would file an appeal in the case, but those with knowledge of the opinion said that it would be difficult for an appeal to be successful.

Dealing with creditors, obtaining new financing and reorganizing one's corporate structure are just a few of the challenges facing businesses as they move through bankruptcy. But with proper planning, a company can return to the marketplace stronger and leaner and without the burden of overwhelming debt.

Source: Chicago Tribune, "Judge confirms Tribune Co. plan to emerge from bankruptcy," Michael Oneal, July 23, 2012.

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