The Tribune Co. was granted a stay of execution, Thursday, when a bankruptcy judge gave the owner of the Los Angeles Times and Chicago Tribune until the end of March to file its long-awaited plan of reorganisation. Although the media conglomerate had asked for an extension until June, the extra month permitted gives the company a fighting chance to resolve its bankruptcy and $8.2 billion leveraged buyout issues, which has resulted in the committee of unsecured creditors attempting to start litigating against the banks, in the hope of recuperating a small part of some of the funds lost.
But Judge Kevin Carey ruled that any litigation must be postponed until April, and called the exclusivity extension the company's "last best chance" to finally work its way out of the troubles it has been in since 2007. In light of his decision he added: "the question in the judge's mind is: If I do things, whether it has to do with exclusivity, does it make the administration of this case better, or does it make it harder? Does it open up the door for the litigation nightmare that others in their submissions have discussed, or does it push things toward a resolution?"
Though bondholders insist that litigation is the only means to recover from the bankruptcy, Reuters reports that one group of secured claim holders describe the potential process as the "World War III" of bankruptcy, which "could subordinate or disallow billions of dollars of secured claims."
The Tribune Co. had reason to be optimistic just last month however, when the bankrupt enterprise announced that still managed to ring in an operating cash flow of almost $500 million at the end of last year in a memo to staff.