Posted by chicagomedia.org on October 08, 2009 at 19:12:48:
In Reply to: Sun-Times union takes Tyree deal posted by chicagomedia.org on October 07, 2009 at 22:02:33:
By Wailin Wong and Michael Oneal | Tribune staff reporters
3:40 p.m. CDT, October 8, 2009
A Delaware bankruptcy judge has approved the sale of the Sun-Times Media Group to a group of investors led by Chicago financier James Tyree.
At a hearing in Wilmington on Thursday, U.S. Bankruptcy Judge Christopher Sontchi gave the nod to the Tyree group's $26 million bid for the company, which publishes the Chicago Sun-Times and more than 50 suburban newspapers and Web sites. The transaction is expected to close by the end of the month.
The deal remains contingent on agreements with two union bargaining groups. In a statement, the Sun-Times Media Group said those agreements are expected to be completed "in the coming days."
Other bargaining groups already have signed off on contract concessions that Tyree was seeking. The Chicago Newspaper Guild and Sun-Times management finally came to terms on Wednesday after weeks of tough negotiations.
The sale will take advantage of the protections afforded by the bankruptcy code to split Sun-Times Media into a "good" company and a "bad" company. Tyree and his investor group will take over a new legal entity that is free and clear of all past obligations, except for the $20 million worth of liabilities the group agreed to take on.
Meanwhile, the "bad" company will stay in bankruptcy court as lawyers wrangle over a set of unfulfilled obligations. An analysis filed with the Delaware bankruptcy court Tuesday showed that pension obligations worth $37.4 million will be left behind to be dealt with by the bankruptcy estate, as will a potential $600 million tax liability left over from the days when the company was run by now-imprisoned former press lord Conrad Black and paroled former Publisher F. David Radler. Neither claim will likely see any recovery, the documents said, although the federal Pension Benefit Guaranty Corp. will help offset some of the pension liability.
Still, said Scott Cargill, a partner with Lowenstein Sandler in New Jersey and the lead counsel for the unsecured creditors committee in the Sun-Times case, creditors like the Internal Revenue Service and trade vendors still see the sale to Tyree as the best of a set of bad alternatives. If the company survives, Cargill said, it will live on to pay taxes, make purchases and provide jobs. If it were liquidated these creditors would get very little now and nothing later.
"Given the realities and the whole industry situation, this was the best result," Cargill said. "It seems like finally the pieces are coming together."
In a statement, Sun-Times Chairman Jeremy Halbreich expressed enthusiasm for the company's future under Tyree.
"These new owners will work hard to establish a wonderful, long future for our publications and for our employees, and finally, all of the legacy issues and distractions that have followed and negatively affected our products will be put to rest," Halbreich said.