Tribune’s Senior Noteholders Lose Battle to Undo Bankruptcy Plan

The Tribune Co.‘s senior noteholders can’t rely on their subordination agreements with other creditors of the bankrupt media conglomerate to recover more under its Chapter 11 plan, the Third Circuit ruled.

The subordination agreements, which provided that the senior noteholders would be paid first, don’t need to be strictly enforced for a court to confirm a “cramdown” bankruptcy plan, the U.S. Court of Appeals for the Third Circuit said Wednesday. Cramdown plans are reorganization and liquidation plans that are confirmed by bankruptcy courts despite objections by entire classes of creditors.

The appeals court’s ruling upheld a finding by the ...