Tribune bankruptcy judge grants public access to examiner’s report, will move deadlines

Judge removes secrecy around Tribune report

WILMINGTON, Del. — The judge overseeing Tribune Co.’s bankruptcy ordered Tuesday that an independent examiner’s report probing the media conglomerate’s 2007 leveraged buyout be made available to the public.

Judge Kevin Carey granted the examiner’s request to remove confidentiality claims surrounding the report, which was submitted under seal last week because of confidentiality concerns by some parties.

Mark Minuti, an attorney for examiner Kenneth Klee, told Carey that no objections to unsealing the report had been filed by the deadline, and that it should be opened to the public immediately.

An unredacted version of the 726-page report was docketed even before the conclusion of Tuesday’s hearing, but attorneys were conferring with the court clerk to determine the best way to post more than 1,200 exhibits and deposition transcripts for public view without overwhelming the electronic filing system.

In his report, Klee concluded, among other things, that talks leading up to the 2007 leveraged buyout of Tribune bordered on fraud. Potential claims arising from the buyout orchestrated by real estate mogul Sam Zell constitute a key issue in Tribune’s reorganization plan, which is based on the proposed settlement of such claims.

Junior bondholders have 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 the settlement that cleared the way for Tribune to file its reorganization plan.

In unsealing the report, Carey also agreed to move several deadlines in the Tribune case to give parties time to analyze and respond to the examiner’s findings.

“We are digesting the examiner’s report, and we’ve been meeting with stakeholders and we’re going to continue to meet with stakeholders,” Tribune attorney James Conlan told the judge, who rescheduled the start of a hearing on whether to approve Tribune’s reorganization plan from Aug. 30 to Oct. 4.

“We are likely to have amendments to the plan,” added Conlan, who did not offer details.

Carey did seem encouraged by the prospect that Tribune is willing to consider changing its plan in an attempt to overcome opposition by certain creditors.

“Do I hear the trickling in of good news?” the judge asked Conlan, who said only that Tribune was hoping to resolve remaining disagreements.

Tribune Co. issued a statement saying it will take time to assess the impact of Klee’s report on its Chapter 11 case.

“As we said before, we agree with some of the examiner’s conclusions and we disagree with others,” the statement read.

Under Tribune’s current 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.

Under the revised case schedule, the deadline for creditors to vote on Tribune’s reorganization plan was moved from Aug. 6 to Aug. 20, with objections due Aug. 27. Experts hired to defend the positions of various parties must submit reports by Aug. 30, and will be deposed beginning Sept. 7.

“We do feel that in light of the examiner’s report, and the size of it and the issues raised, we all need to take a step back and see what the implications are for the plan,” said Howard Seife, an attorney for Tribune’s official committee of unsecured creditors.

But Carey denied a request by Aurelius Capital Management, which holds senior notes issued by Tribune, to extend the voting and objection deadlines by 30 days.

Matthew Kramer, an attorney for Aurelius, said the revised case schedule still does not allow adequate time for creditors to respond to the examiner’s report.

“I’ll bet they could do it in less than 10 business days if they had to,” said Carey, who did postpone a hearing on Klee’s request to be discharged and protected from having to respond to requests from third parties for information compiled during his investigation.

“I’d like to see the dust settle a little bit before we let you go,” said the judge, who will hold a hearing on Klee’s request on Aug. 20.

____

Online: Examiner’s Report, Docket Item 5247:

dm.epiq11.com/TRB/docket/Default.aspx?rc1&DMWin5bfff2e9-1715-4f7b-8c0b-b019a6f325e5