Also, a court-appointed examiner probing Mr. Zell's buyout for possible fraud could give ammunition to creditors of all stripes to battle Tribune's restructuring plans.
Investors holding some of the largest amounts of Tribune's bank debt—including J.P. Morgan, Bank of America Corp.'s Merrill Lynch, Angelo, Gordon & Co. and Avenue Capital Group—support the company's settlement and restructuring plan, leaving fewer influential creditors for Oaktree to rally to its cause.
Still, the Oaktree group, if it holds together, remains in striking distance of blocking Tribune's bankruptcy plan, holding about a quarter of Tribune's bank debt. To exit from court, Tribune needs creditors holding roughly two-thirds of its $8.7 billion in bank debt to approve the company's current deal, meaning a coalition holding one-third of the debt could scuttle the company's plans. Tribune's plan was put to creditors to a vote earlier this month.
At issue for the Oaktree group are the terms of Tribune's settlement over litigation related to Mr. Zell's leveraged buyout. The buyout ballooned Tribune's debt to about $13 billion, and bondholders led by Centerbridge Partners LP alleged the deal amounted to a "fraudulent conveyance" that rendered the company insolvent. Bondholders agreed to drop the litigation in exchange for 7.4% of Tribune's value. Bank lenders will forgive their debt for a 91% ownership stake in the company.
All are awaiting a report from bankruptcy-court examiner Kenneth Klee, which will probe circumstances surrounding Tribune's ill-fated buyout. If Mr. Klee finds that fraudulent-conveyance claims have merit, it could embolden lower-ranking creditors and push the Oaktree group to accept the current settlement, which insulates bank lenders and others from legal liability.