A US judge has rejected a rival pair of plans intended to bring the Tribune Co., owner of the Chicago Tribune, Los Angeles Times and other newspapers, out of bankruptcy.
US bankruptcy judge Kevin Carey rejected the plans late Monday and ordered a hearing on the three-year-old case to be held in his courtroom in Wilmington, Delaware on November 22.
The Tribune Co., which owns 23 television stations in addition to newspapers in Chicago, Los Angeles, Baltimore, Orlando and other cities, filed for Chapter 11 bankruptcy protection in December 2008.
Chapter 11 protects a company from its creditors while it restructures.
The reorganization plans before the judge were known as the "DCL Plan," submitted by a group of creditors led by Oaktree Capital Management and JPMorgan Chase Bank, and the "Noteholder Plan" backed by Aurelius Capital Management and Deutsche Bank Trust Company Americas.
"Neither the DCL Plan nor the Noteholder Plan is confirmable," Judge Carey said in his 126-page opinion.
"I am uncertain, at this point, what steps the debtors or other parties may take as a consequence of this decision," Carey said.
"It may be that the parties simply will try to address the issues raised in this opinion, or that an entirely new plan or plans will be devised," he said.
"Perhaps parties will realign," the judge said. "Perhaps yet another attempt will be made to reach consensus."
While the judge rejected both plans, he was more open to the DCL Plan.
"Although both plans claim to allow the debtors to reorganize, the DCL Plan better supports this goal by resolving significant claims and providing the debtors with more certainty regarding preservation of estate value and a better foundation for revitalizing business operations," he said.
The judge's opinion also included signs of growing impatience with the long-running case.
He opened with a recounting of the parable of the scorpion that asks a fox for a ride across the river and then stings the fox mid-stream, ensuring both their deaths.
"There is no moral to this story," the judge said. "Its meaning lies in the exposition of an inescapable facet of human character: the willingness to visit harm upon others, even at one's own peril."
"The court is of the determined view that the debtors must promptly find an exit door to this Chapter 11 proceeding," the judge said, raising the possibility that he may appoint a Chapter 11 trustee to resolve the case.
Sam Zell, a Chicago real estate titan, led an eight-billion-dollar leveraged buyout of the Tribune Co. in 2007 and the company declared bankruptcy the next year.
It sold the Chicago Cubs baseball franchise and its iconic stadium, Wrigley Field, in 2009.