In re Tribune Co.
476 B.R. 843
Bankr. D. Del.2012Background
- Fourth Amended Joint Plan of Reorganization for Tribune and Subsidiaries, proposed by the DCL Plan Proponents, seeks confirmation despite unresolved objections from Aurelius, Law Debenture, Deutsche Bank, Wilmington Trust, Citadel Camden, EGI, former D&Os, and Certain Former Employees.
- Hearing on confirmation occurred June 7–8, 2012, with a continued session by conference call on June 11, 2012, and a revised Fourth Amended Plan filed June 18, 2012 to incorporate modifications addressing objections.
- Allocation Decision dated April 9, 2012 resolved inter-creditor priority issues (including subordination and distribution ordering) contingent upon confirmation of a plan substantially in the form of the Third Amended Plan, and the Fourth Amended Plan removed the Allocation Dispute Protocol accordingly.
- PHONES Notes subordination and Tendering Noteholder issues were central; the Court determined the Tendering Noteholders’ claims should be allowed in the exchange amount Tribune was obligated to pay as of the petition date, influencing PHONES claim amounts.
- Two reserves remained in the Fourth Amended Plan: an Other Parent Claim Reserve and a Subsidiary GUC Reserve for disputed or unresolved claims, with EGI and WTC likely to appeal subordination rulings if preserved on review.
- The Court overruled remaining objections and concluded that, subject to final revisions consistent with the memorandum, the Fourth Amended Plan would be confirmed and the Clarification Motion denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Classification of Indenture Trustee Expense Claims | Indenture Trustee Expense Claims are properly in Class IE with Senior Notes Claims | Expense claims should be in Class IF as Other Parent Claims due to non-substantial similarity | Class IE proper; classification affirmed |
| Classification of Tendering Noteholder Claims vs PHONES Notes | Tendering Noteholders’ claims are substantively similar to PHONES Notes claims | Tendering Noteholders should be subordinated and classified with PHONES Notes only | Tendering Noteholder Claims are substantially similar to PHONES Notes Claims; proper classification with PHONES |
| Effect of Allocation Decision on MDL rights | Allocation Decision does not prejudice MDL rights; clarification unnecessary | Allocation Decision potentially affects MDL positions; needs clarification | Clarification denied; Allocation Decision not binding on MDL rights here |
| Reserves for Subordinated Claims and Disputed Inter-Creditor Issues | Reserves for Disputed Claims and subordinated PHONES/EGI claims are appropriate to preserve distributions | Reserves constitute unfair discrimination or improper stay relief absent proper standards | Reserves for Disputed Claims upheld; not unfair discrimination under plan standards |
| Neutrality and language of 5.8.2 amendments preserving rights | Neutral language preserves rights to Disclaimed State Law Avoidance Claims/Preserved Causes of Action | Proposed neutral language insufficient to protect defendants' rights | Neutral language found adequate; rejected additional proposed terms |
Key Cases Cited
- AOV Indus., Inc. v. Jersey City Med. Ctr., 792 F.2d 1140 (D.C. Cir. 1986) (unsecured claims may be grouped; similarity analyzed by rights against estate)
- In re Coram Healthcare Corp., 315 B.R. 321 (Bankr. D. Del. 2004) (classification must be reasonable; not arbitrary to gerrymander votes)
- John Hancock Mut. Life Ins. Co. v. Route 37 Bus. Park Assocs. (In re Route 37 Bus. Park Assocs.), 987 F.2d 154 (3d Cir. 1993) (unsecured creditors may be in different classes if voting voice is distinct)
- In re Greystone III Joint Venture, 995 F.2d 1274 (5th Cir. 1991) (principle that classification must be reasonable and not for manipulating votes)
- In re Worldwide Direct, Inc., 334 B.R. 112 (Bankr. D. Del. 2005) (indenture trustee expense claim may be treated as component of allowed note-holder claims)
- In re Armstrong World Indus., Inc., 348 B.R. 136 (Bankr. D. Del. 2006) (classification can be reasonable to separate distinct voting interests)
- In re Exide Tech., 303 B.R. 48 (Bankr. D. Del. 2003) (tests for unfair discrimination in plans)
- Genesis Health Ventures, Inc., 266 B.R. 591 (Bankr. D. Del. 2001) (unfair discrimination analysis focuses on reasonableness and ability to confirm)