The Star Tribune Company and its parent yesterday filed voluntary petitions to reorganise under Chapter 11 in order to achieve necessary cost reductions and create a financially viable business. The bankruptcy judge in New York granted a short-term financing arrangement worth $300 million.
The filings were made on 15 January 2009, in the US bankruptcy court for the Southern District of New York.
The financing arrangement, which was given by Barclays Bank on the security given by Tribune of its receivables and the security will last until April after which, Tribune will have the option of renegotiating with Barclays or look for finance from other sources.
The Chicago-based media company, which owns the Chicago Tribune, the Los Angeles Times and KTLA-TV Channel 5, as well as the Chicago Cubs baseball team, has been facing declining print advertising like several other newspapers and burdened with huge debts.
Last month it hired advisers to assist with preparations for a possible bankruptcy-protection filing. (See:The Tribune Company heading for possible bankruptcy: Reports)
Tribune has endured numerous financial difficulties since it was acquired by real-estate developer Sam Zell in an $8.2 billion deal that took the business private. The financing of his transaction involved the creation of an employee stock program that has incurred a significant amount of debt. (See: Tribune goes private; Sam Zell named chairman and CEO)