WILMINGTON, Del. (CBS) — The Tribune Company bankruptcy case remains unsettled, after a federal judge rejected the latest plans.

As WBBM Newsradio’s Bob Conway reports, U.S. District Judge Kevin Carey rejected the latest Tribune plan to emerge from bankruptcy protection, and a rival proposal from Tribune creditors.

LISTEN: WBBM Newsradio’s Bob Conway reports

Carey said in a 126-page ruling that he may appoint a trustee to help end the 3-year-old case if the company cannot come up with an acceptable plan.

In rejecting both plans, the judge said the long-running case needs to end quickly, and said he would appoint a trustee if the company cannot come up with an acceptable plan soon.

The Tribune Company sought bankruptcy protection three years ago. The move came after the company failed to generate enough revenue to repay more than $13 billion in debt incurred when real estate mogul Sam Zell took the company private a year earlier.

The company’s reorganization plan included a settlement shielding the buyout lenders from lawsuits while allowing claims against others involved in the buyout, including Zell and other Tribune Company officers and directors.

The plan would have given ownership of the Tribune Company to a group led by JPMorgan Chase, distressed debt specialist Angelo, Gordon & Co. and hedge fund Oaktree Capital Management. In exchange, lenders would have forgiven most of the company’s debt, which totaled about $13 billion when it sought bankruptcy protection.

The plan, which valued the company at about $6.75 billion, called for creditors not involved in the buyout to receive about $488 million, or roughly 33 cents on the dollar.

A group of creditors led by hedge fund Aurelius Capital Management argued that JPMorgan and other lenders that financed the buyout were well aware of the Tribune Company’s shaky financial situation in 2007 and were escaping legal liability too easily under the Tribune’s plan.

That creditor group submitted a competing plan calling for smaller upfront guarantees to creditors in hopes of eventually recovering billions of dollars through lawsuits against the buyout lenders and others. Carey said he couldn’t accept this plan either. Stephen Sigmund, a spokesman for Aurelius, had no immediate comment.

The Tribune Company employs more than 12,000 people at its newspapers, television stations and other media properties.

The case is due back in court on Nov. 22.

(TM and © Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS Radio and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press contributed to this report.)

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