In re Tribune Co.

• Decision Date: 22 August 2012
• Docket Number: No. 08–13141 KJC.,08–13141 KJC.
• Citation: 477 B.R. 465
• Parties: In re TRIBUNE COMPANY, et al., Debtors.
• Court: U.S. Bankruptcy Court — District of Delaware

477 B.R. 465

In re TRIBUNE COMPANY, et al.,¹ Debtors.

No. 08–13141 KJC.

United States Bankruptcy Court, D. Delaware.

Aug. 22, 2012.

Bryan Krakauer, James F. Conlan, Sidley Austin LLP, Chicago, IL, Carl D. Neff, Wilmington, DE, Edward Cerasia, II, Seyfarth Shaw LLP, New York, NY, George R. Dougherty, Gregory Kopacz, Jared D. Zajac, McDermott, Will & Emery LLP, New York, NY, Holly Snow, Paul Hastings LLP, Chicago, IL, Patrick J. Reilley, Kate Stickles, Norman L. Pernick, Cole, Schotz, Meisel, Forman & Leonard, Wilmington, DE, John R. McCambridge, Michael W. Kazan, Grippo & Elden, Chicago, IL, John H. Strock, III, Fox Rothschild LLP, Wilmington, DE, Michael A. Henry, Gross, McGinley, Labarre & Eaton, LLP, Allentown, PA, O. Andrew F. Wilson, Emery Celli Brinkerhoff & Abady LLP, New York, NY, Patricia K. Smoots, McGuireWoods LLP, Chicago, IL, Patrick Theodore Garvey, Johnson & Bell, Ltd., Chicago, IL, Patrick T. Nash, Grippo & Elden, Chicago, IL, Robert S. Brady, Young, Conaway, Stargatt & Taylor, Wilmington, DE, Stephen Novack, Novack and Macey LLP, Chicago, IL, for Debtors.

Adam G. Landis, Kimberly A. Brown, Landon Ellis, Matthew B. McGuire, Rebecca L. Butcher, Richard Scott Cobb, Landis Rath & Cobb LLP, Wilmington, DE, James S. Green, Sr., Seitz, Van Ogtrop & Green, PA, Wilmington, DE, Marc B. Roitman, Robert A. Schwinger, Chasnourne & Parke LLP, New York, NY, Mona A. Parikh, Buchanan Ingersoll & Rooney PC, Wilmington, DE, for Official Committee of Unsecured Creditors.

MEMORANDUM (i) DENYING CERTIFICATION FOR IMMEDIATE APPEAL TO THE THIRD CIRCUIT AND (ii) GRANTING STAY PENDING APPEAL ( UPON POSTING OF BOND )²

KEVIN J. CAREY, Bankruptcy Judge.

On July 23, 2012, an order was entered confirming the Fourth Amended Plan Joint Plan of Reorganization for Tribune Company and Its Subsidiaries Proposed by The Debtors, The Official Committee of Unsecured Creditors, Oaktree Capital Management, L.P., Angelo Gordon & Co, L.P. and JPMorgan Chase Bank, N.A. (docket no. 12074) (the “Confirmation Order”).³ The Confirmation Order was entered after a series of decisions addressing a myriad of issues related to the DCL Plan Proponents' efforts to achieve confirmation of a plan of reorganization, including:

(i) the Confirmation Opinion dated October 31, 2011 and accompanying Order (docket nos. 10133, 10134), In re Tribune Co., 464 B.R. 126 (Bankr.D.Del.2011) (the “2011 Confirmation Opinion” or “Tribune I ”),

(ii) the Memorandum on Reconsideration dated December 29, 2011 and accompanying Order (docket nos. 10531 and 10532), In re Tribune Co., 464 B.R. 208 (Bankr.D.Del.2011) (the “Reconsideration Decision” or “ Tribune II” ),

(iii) the Memorandum Regarding Allocation Disputes dated April 9, 2012 and accompanying Order (docket nos. 11337 and 11338), In re Tribune Co., 472 B.R. 223 (Bankr.D.Del.2012) (the “Allocation Decision” or “Tribune III ”), and

(iv) the Memorandum Overruling Objections to Confirmation of the Fourth Amended Plan of Reorganization for Tribune Company and Its Subsidiaries and Denying Clarification Motion and accompanying Order (docket no. 12033 and 12034), In re Tribune Co., 2012 WL 2885921 (Bankr.D.Del. July 13, 2012) (the “Fourth Amended Plan Decision” or “ Tribune IV ”).

Various parties filed appeals of the quartet of confirmation-related decisions and the Confirmation Order.⁴ Currently before the Court are motions seeking certification for direct appeal of certain issues to the United States Court of Appeals for the Third Circuit pursuant to 28 U.S.C. § 158(d)(2), and motions seeking a stay pending appeal pursuant to Fed.R.Bankr.P. 8005; more particularly:

(1) Motion of Law Debenture Trust Company of New York (“Law Debenture”) and Deutsche Bank Trust Company Americas (“Deutsche Bank”) Pursuant to 28 U.S.C. § 158(d)(2) and Fed.R.Bankr.P. 8001(f) Requesting Certification of Direct Appeal to United States Court of Appeals for Third Circuit of the Unfair Discrimination Issue in the Allocation Disputes Order as Incorporated in the Order and Memorandum Opinion on Confirmation (docket no. 12084) (the “Law Debenture Certification Motion”),

(2) EGI–TRB, LLC's (“EGI”) Motion for Certification of Direct Appeal to the United States Court of Appeals for the Third Circuit (docket no. 12198) (the “EGI Certification Motion”),

(3) Motion for Stay Pending Appeal Pursuant to Bankruptcy Rule 8005 filed by Aurelius Capital Management, LP (“Aurelius”) (docket no. 12080) (the “Aurelius Stay Motion”), and

(4) Motion of Law Debenture and Deutsche Bank for Stay Pending Appeal of Confirmation Order (docket no. 12085) (the “Law Debenture Stay Motion”). ⁵

A scheduling order regarding the foregoing motions was entered on August 1, 2012 (docket no. 12147). The DCL Plan Proponents filed an Objection to the Motions for an Order Certifying Direct Appeal of the Confirmation Order (docket no. 12216) (the “DCL Objection to Certification”) and an Objection to the Motions for a Stay Pending Appeal of the Confirmation Order (docket no. 12217) (the “DCL Objection to Stay”). A hearing to consider the Certification Motions and the Stay Motions was held on August 17, 2012 (the “Stay Hearing”).

For the reasons set forth herein, the Certification Motions will be denied and the Stay Motions will be granted, conditioned upon the posting of a supersedeas bond in the amount of $1.5 billion.

DISCUSSION

I. The Certification Motions

28 U.S.C. § 158(d)(2)(A) provides that a bankruptcy court may certify a final order for immediate appeal to a federal court of appeals if it determines that:

(i) the judgment, order or decree involves a question of law as to which there is no controlling decision of the court of appeals for the circuit or of the Supreme Court of the United States, or involves a matter of public importance;

(ii) the judgment, order or decree involves a question of law requiring resolution of conflicting decisions; or

(iii) an immediate appeal from the judgment, order or decree may materially advance the progress of the case or proceeding in which the appeal is taken; and if the courts of appeals authorizes the direct appeal of the judgment order or decree.

28 U.S.C. § 158(d)(2)(A). See also In re Nortel Networks Corp., 2010 WL 1172642, *1 (Bankr.D.Del. March 18, 2010). Section 158(d)(2)(B) provides that certification to the court of appeals is mandatory if the bankruptcy court determines that circumstances specified in (i), (ii) or (iii) of subparagraph (A) exists. 28 U.S.C. § 158(d)(2)(B).

A. The Law Debenture Certification Motion

Law Debenture and Deutsche Bank (together, the “Indenture Trustees”) request certification for direct appeal of two issues:

1. Whether the Bankruptcy Court erred in confirming the Plan because the Plan discriminates unfairly against the Senior Noteholders (as defined in the Plan) in violation of Section 1129(b)(1) of the Bankruptcy Code by providing materially lower and disparate treatment to the Senior Noteholders as compared to the treatment of Other Parent Claims with respect to distributions from the estate (before taking into account any reallocations resulting from contractual subordination) and by disregarding the subordination provisions of the PHONES Indenture and the EGI–TRB Subordination Agreement in reallocating distributions otherwise payable to the subordinated debt (the “Unfair Discrimination Issue”).

2. Whether the Bankruptcy Court erred in determining that the SWAP Claim falls within the definition of Senior Indebtedness in the PHONES Indenture and within the definition of Senior Obligations under the EGI Subordination Agreement (the “SWAP Claim Issue”).

Law Debenture Certification Motion, ¶ 21. The Indenture Trustees argue that immediate appeal of the foregoing issues is appropriate under both (i) and (iii) of 28 U.S.C. § 158(d)(2)(A).

Controlling Law

The Indenture Trustees argue that certification of the Unfair Discrimination Issue is required because there is no controlling law regarding the statutory interpretation of either the “notwithstanding section 510(a)” or the “not discriminate unfairly” language in 11 U.S.C. § 1129(b)(1).⁶

In the Allocation Decision, my analysis of the statute's language “notwithstanding section 510(a)” was informed by the Third Circuit Court of Appeals' decision in In re Goody's Family Clothing, Inc., 610 F.3d 812, 817 (3d Cir.2010), which interpreted the meaning of “notwithstanding” as it appears in Bankruptcy Code § 365(d)(3). Tribune III, 472 B.R. at 241. The Indenture Trustees argue that Goody's is not controlling law, since it interprets “notwithstanding” in the context of a different Bankruptcy Code section. The United States Supreme Court has noted that “[p]resumptively, identical words used in different parts of the same act are intended to have the same meaning.” U.S. Nat'l Bank of Oregon v. Indep. Ins. Agents of America, Inc., 508 U.S. 439, 460, 113 S.Ct. 2173, 124 L.Ed.2d 402 (1993) (citations and internal punctuation omitted).

The Indenture Trustees further argue that any presumption of similar meaning of the word “notwithstanding” in separate Bankruptcy Code sections is rebutted by the legislative history of Section 1129(b)(1), which includes a discussion of a plan's treatment of senior debt and junior debt to illustrate examples of unfair discrimination. See Tribune III, 472 B.R. at 239 citing Vol. C Collier On Bankruptcy App. Pt. 4(d)(i) at 416–418 (15th ed. rev.) (legislative history of § 1129(b)(1)). In the Allocation Decision, I determined that the legislative history of § 1129(b)(1), which has been described as “roundabout, almost otiose,” was not determinative of this issue. Id. There is controlling precedent for reliance on unambiguous statutory language, rather than the legislative history, in both the United States Supreme Court ( Exxon Mobil Corp. v. Allapattah Serv., Inc., 545 U.S. 546, 568, 125 S.Ct. 2611, 2626, 162 L.Ed.2d 502 (2005) (“As we have repeatedly held, the authoritative statement is the statutory text, not the legislative...