(Reuters) – Tribune Co creditors won a stay Wednesday of last month’s order confirming the company’s plan to exit bankruptcy, so long as they pay a $1.5 billion bond.
U.S. Bankruptcy Judge Kevin Carey in Wilmington, Delaware gave the creditors until August 29 to post the bond in order to keep the plan on hold while they pursue an appeal. The judge said it would be hard to “unscramble the egg” if he let the plan become effective before the appeal.
Creditors including Aurelius Capital Management LP had appealed Carey’s July 23 decision signing off on the plan for the publisher of the Chicago Tribune, Los Angeles Times and Baltimore Sun.
Auerlius, which has been leading the opposition to the plan, has argued it and a related settlement would force bondholders to accept only $369 million for $2 billion to $2.3 billion in legitimate claims.
Aurelius said the payout is “far below the lowest rung in the range of reasonableness.”
It is unclear if the creditors can pay the massive bond, though. Tribune CEO Eddy Hartenstein told employees in an email Wednesday that the bondholders had at a hearing Friday “indicated that they would be either unwilling or unable to post such a bond.”
But Hartenstein said Tribune expected they may decide to appeal the decision to the U.S. District Court in Delaware.
Stephen Sigmund, a spokesman for Aurelius, declined comment.
Tribune’s emergence from bankruptcy remains conditional on the Federal Communications Commission approving transferring broadcast licenses to new owners.
The case is In re: Tribune Co et al, U.S. Bankruptcy Court, District of Delaware, No. 08-13141.
(Reporting By Nate Raymond in New York- Editing by Richard Pullin)