Monday, October 10, 2011
By Steven Church
Bloomberg Business Week
Tribune Co., the biggest media company in bankruptcy, agreed to pay the Internal Revenue Service $7 million to settle allegations that the company’s 2007 leveraged buyout violated U.S. tax law.
The settlement ends a fight over whether the company must pay $37.5 million to the IRS, which alleged that the company owed unpaid taxes related to its almost $13 billion leveraged buyout.
The deal “resolves a major outstanding claim against Tribune on very favorable terms to the debtors,” the company said in court papers filed today in U.S. Bankruptcy Court in Wilmington, Delaware.
Tribune filed for bankruptcy in 2008, one year after billionaire Sam Zell led a buyout that added more than $8 billion in debt onto the Chicago-based company. Tribune owns newspapers including the Los Angeles Times the Chicago Tribune, along with television and radio stations.
Two groups of hedge funds are waiting for U.S. Bankruptcy Judge Kevin J. Carey to pick one of two competing plans to reorganize the company so it can leave bankruptcy.
The IRS claim was related to the structure of the deal, which was designed to avoid some federal taxes.
The bankruptcy case is In re Tribune Co., 08-bk-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--Editors: Mary Romano, Michael Hytha
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Posted by Robert Daraio at 2:34 PM