Tuesday, August 17, 2010

Tribune Creditors Win Judge's Approval for More Time to Vote on Exit Plan

By Steven Church

A judge gave Tribune Co. creditors more time to vote on the publishing company’s plan to exit bankruptcy while it negotiates with opponents.

U.S. Bankruptcy Judge Kevin J. Carey in Wilmington, Delaware, scheduled a hearing for Aug. 20 to set court dates that may affect the company’s plan to exit bankruptcy this year.

James Conlan, a Tribune attorney, said company officials are talking with creditors who oppose the plan to give more than 90 percent of Tribune to the lenders who financed a 2007 buyout. Lower-ranking creditors who hold $1.2 billion in pre-buyout debt would get nothing under the plan.

“I don’t want to imply pessimism or optimism,” Conlan told Carey about the talks.

Creditors have been reviewing a report by a court-appointed examiner who found evidence of a fraudulent transfer involving part of the deal that real-estate billionaire Sam Zell used to take over Tribune. Creditors are “somewhat likely” to win a lawsuit based on the smaller piece of the $8.3 billion transaction, the examiner said.

Some creditors have said the report will help them decide how to vote on Tribune’s reorganization plan. Carey will take those votes into consideration when he decides whether to approve the plan at a hearing scheduled to start in October.

Depending on how negotiations go this week, that date, along with other related deadlines, may change, Conlan said.

Tribune owns the Los Angeles Times, the Chicago Tribune and television and radio stations. It filed for bankruptcy in December 2008, about a year after the buyout was completed.

The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net.

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