Tribune Co., the owner of the Chicago Tribune in Illinois, announced recently that it received the regulatory approval needed to exit its almost four-year stay in bankruptcy. The Tribune received approval from the Federal Communications Commission to transfer broadcast licenses to other owners that are set to take over the company after it emerges from bankruptcy, which will provide considerable debt relief to the struggling company. Tribune’s CEO stated that this step will allow the company to continue on its path to emerge from Chapter 11 bankruptcy, as expected, in the next few weeks. The process has seen a bitter battle between the company’s lenders and bondholders. The company entered bankruptcy in 2008 after a 2007 leveraged buyout of the company left it with $13 billion in debt which coincided with a significant drop for the newspaper industry in advertising revenue.
Emergence from Chapter 11 business bankruptcy can provide an overwhelming sense of debt relief. Chapter 11 bankruptcies allow corporations and small businesses with heavy debt burdens to reorganize, in hopes of eliminating debt and restoring profitability to the company. While the Chapter 11 process may take longer than a Chapter 7 “liquidation bankruptcy,” both alternatives should be considered for those seeking debt relief.
Chapter 11 bankruptcy allows the company facing financial challenges to develop a reorganization plan that will temporarily prevent creditors from pursuing collection activities. If the plan is reasonable, it will commonly be approved by the court. The way the process works, once the plan is approved, debts that existed before its confirmation, and not addressed in the plan, are discharged. The debtor is then required to repay creditors according to the agreements that were reached and comply with the reorganization plan.
Emerging from Chapter 11 bankruptcy following a debt discharge can provide a struggling company with much needed debt relief. It can be a worthwhile alternative for a fresh start.
Source: Chicago Tribune Business, “Tribune Co gets FCC approval, nears bankruptcy exit,” Author Unknown, Nov. 16, 2012.
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Chicago Tribune emerges from bankruptcy–hopes for a fresh start