Creditors May Not Get All They're Owed After Tribune Ruling

By Lisa Schweitzer and Thomas Lynch (September 2, 2020, 5:38 PM EDT) -- You can't always get what you want, or what you thought you were owed under a subordination agreement, according to the U.S. Court of Appeals for the Third Circuit in its recent decision in In re: Tribune Co.,[1] when it affirmed the cramdown of the media conglomerate's Chapter 11 plan of reorganization.[2]

In its Aug. 26 opinion, the court rejected arguments that the plan violated Sections 510(a) and 1129(b)(1) of the U.S. Bankruptcy Code by failing to fully enforce a series of prepetition debt subordination agreements and, in the alternative, that the plan unfairly discriminated against certain senior noteholders.

Instead, the...

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