From the Associated Press (and I hope THEY don't go under...)
Initial hearing held in Tribune bankruptcy
By RANDALL CHASE
WILMINGTON, Del. (AP) — Tribune Co. was authorized Wednesday to make certain payments to employees, vendors and others as it works through a Chapter 11 bankruptcy reorganization.
Judge Kevin Carey said the company, which owns the Los Angeles Times, Chicago Tribune, The (Baltimore) Sun and other dailies, could pay $74 million that was owed to employees before Monday's bankruptcy petition was filed. That total includes a cap of $10,950 per person but excludes payments for health care, long-term disability, reimbursable expenses, workers' compensation and retiree medical care.
Carey also approved orders allowing Chicago-based Tribune to use its existing, centralized cash management system during the reorganization and to continue a securitization arrangement with Barclays PLC bank that will allow it to access an additional $75 million, for a total of $300 million.
The judge also authorized Tribune to make payments for a variety of other pre-petition obligations, including some $20 million to critical vendors, $18 million in tax, licensing and similar obligations, and $5.5 million to shippers.
James Conlan, an attorney representing the company, said the nation's largest employee-owned media and entertainment company was forced to seek bankruptcy protection because of dwindling advertising revenues.
"There has been, to say the least, a precipitous decline in the advertising business generally," Conlan said.
Tribune, which also owns 23 television stations and the Chicago Cubs baseball team, is the first major newspaper publisher to file for bankruptcy protection since the Internet plunged the industry into a struggle for survival.
Conlan told the judge that with the exception of two stock pledges, the Tribune operating companies have no secured debt, which leaves the company in "a strikingly good position" to reorganize intelligently.
The bankruptcy case involves 111 of Tribune's 128 entities, with the others, notably the Cubs, not part of the proceedings.
James McMahon, an attorney representing the acting U.S. trustee, expressed concerns about allowing the company to use its existing cash management system during the reorganization, suggesting that cash transfers to or from parts of the company not involved in the bankruptcy could make it difficult to define what issues the court faces.
McMahon said that if the Cubs' positive cash flow, for example, masked problems with other Tribune entities, "then we've got an issue."
But Bryan Krakauer, an attorney representing Tribune, said it would be unreasonable to set up separate cash management accounts for each of the debtor entities, given the size of the company.
Krakauer said the 14 entities not involved in the bankruptcy are valuable assets of the debtors, and that, in the aggregate, any transfers among them would be cash positive to the debtors. He said Tribune would provide monthly updates on the transfers to other parties in the case.
Carey agreed to issue an interim order allowing the use of transfers under the existing cash managaement system at least until the next court hearing, which is scheduled for Jan. 5.
"I do so based on the understanding that it's a net positive between now and then," the judge said.
The company filed for bankruptcy protection Monday, listing $13 billion in debt and $7.6 billion in assets.
In an interview on CNBC, Tribune Chairman and Chief Executive Sam Zell described the bankruptcy filing as a "pre-emptive" act to preserve the company's assets and allow for a reorganization.
"In the end, my responsibility is to preserve the value of the company and to make sure that it will go on into the future," he said.
Tribune already has made hundreds of layoffs at its papers and reduced the number of pages they publish. Zell said that bankruptcy protection will allow the company to focus on broader issues, including consolidation.
He said the bankruptcy filing should not impede the planned sale of the Chicago Cubs, Chicago's Wrigley Field and other sports properties, which Tribune had been looking to sell to generate cash for a $593 million principal payment due in June.
The company got three final bids, but a tight credit market has made it tougher for potential buyers to obtain loans.
(This version SUBS 19th graf to correct syntax and REMOVE attribution to Zell in first sentence of that graf.)