In a recent Reuters article, Jonathan Lipson discussed competing efforts to repay creditors in the contentious Tribune Company Bankruptcy.
In the Tribune case, Delaware Bankruptcy Judge Kevin Carey is weighing two plans for repaying creditors, one backed by Aurelius Capital Management and one backed by the company and its lenders. Aurelius is chaired by Mark Brodsky, a well-known figure in bankruptcy cases.
Brodsky wants to create a trust that would pursue all potential claims against billionaire developer Sam Zell, who orchestrated Tribune's buyout, plus bankers and others. Any money the trust collects would be distributed to creditors. The company argues that only some claims should be pursued and its plan would get bondholders some payment more quickly.
Some of the legal claims that Brodsky hopes to pursue in the Tribune case—in particular claims that the Tribune’s leveraged buyout was a fraudulent conveyance—are rarely litigated in large bankruptcies.
“They are incredibly expensive and often ugly and uncertain and so it's usually quite rational to settle,” said Jonathan Lipson. The management plan would, in effect, settle most of these claims, while the Aurelius plan would not.
To read the full Reuters article, click here.
Submitted by UW Law News on March 31, 2011
This article appears in the categories: In the Media