Bankruptcy judge gives Tribune more time to win support for reorganization plan documents

Judge allows more time in Tribune reorg process

WILMINGTON, Del. — A bankruptcy judge gave Tribune Co. more time Friday to satisfy lenders’ objections before ruling on whether to approve documents describing and soliciting support for the media company’s reorganization plan.

After hearing arguments regarding the disclosure statement outlining Tribune’s proposed Chapter 11 plan and the solicitation document seeking votes from creditors, Judge Kevin Carey said he would hold a teleconference with attorneys next week.

Bryan Krakauer, an attorney for Tribune, said the company would file revisions by Tuesday morning to the plan documents. Attorneys for Wells Fargo, an agent for unsecured bridge lenders who provided $1.6 billion in financing to Tribune in 2007, will have one day to respond.

The bridge lenders have objected to the disclosure statement accompanying the company’s proposed reorganization plan, saying its description of how they will be treated is vague and inconsistent with language in the plan itself.

The bridge lenders want Tribune to be clearer on what recovery they would see if they vote as a class to reject Tribune’s plan. They also seek to protect their rights to any potential claims they might have against senior lenders who financed the 2007 leveraged buyout engineered by real estate mogul Sam Zell that took Tribune private but saddled it with debt.

The judge has appointed an independent examiner to review the buyout and the potential claims arising from it that might be brought on behalf of the bankruptcy estate.

Junior bondholders alleged in a lawsuit that JPMorgan, Bank of America and other banks that financed the buyout engaged in fraudulent conduct because they knew the debt would leave Tribune insolvent. Tribune’s committee of unsecured creditors also sought to pursue claims against the banks but dropped its challenge as part of a settlement that cleared the way for the filing of Tribune’s proposed reorganization plan.

Under Tribune’s plan, JPMorgan and distressed-debt specialist Angelo, Gordon & Co. would be among the new owners of the company’s media properties, which include Los Angeles Times, the Chicago Tribune, other daily newspapers and broadcast stations.

Centerbridge Partners, which leads a group that owns outstanding senior bond debt, would get a 7.4 percent stake in Tribune. In return, Centerbridge would release any claims it might have related to the 2007 buyout.