A federal bankruptcy judge in Delaware will hold a hearing next month to address appeals challenging his approval of the Tribune Co.’s reorganization plan.
Judge Kevin Carey told attorneys on Wednesday that he will hold the hearing on Aug. 17.
Separate appeals were filed this week by hedge fund Aurelius Capital Management and other creditors in opposition to Tribune’s reorganization plan. The appeals challenge the fairness of a settlement of legal claims against banks that financed Tribune’s 2007 leveraged buyout. They also challenge the treatment of certain bond holders under Tribune’s plan.
Tribune publishes The Baltimore Sun, the Los Angeles Times, the Chicago Tribune and several major newspapers in the U.S. and owns television stations as well. The company sought bankruptcy protection after the $8 billion buyout, led by billionaire Sam Zell, left it saddled with $13 billion in debt.
The creditors hold debt that preceded the buyout loans and claim that the settlement robbed them of the ability to collect by leaving Tribune insolvent. They want the settlement set aside so they can sue.
The “settlement fell far below the lowest rung in the range of reasonableness,” Aurelius said in court papers filed this week. Under the reorganization plan, the lenders who funded the 2007 buyout will own Tribune after it exits bankruptcy.
Tribune is valued at more than $7 billion, the company said in court papers.
Should Carey reject the challenge, Tribune would be free to move on to the next phase in the bankruptcy — winning approval from federal regulators to transfer its radio and television licenses to the proposed new owners.
Tribune officials have said the company will be able to exit bankruptcy this year should federal regulators approve the reorganization plan and the license transfers.
Tribune Chief Executive Officer Eddy Hartenstein told employees in an e-mail that he expects the appeals to fail: “We also do not expect that these appeals will interfere with our efforts to emerge from bankruptcy as soon as possible.”
Bloomberg contributed to this article.