Tribune wants more time to reorganize in bankruptcy
Tribune Co. sought more time to negotiate an end to its bankruptcy, saying creditors continue to debate among themselves how to split up the publishing company.
Lawyers for the company asked U.S. Bankruptcy Judge Kevin Carey to extend their exclusive right to propose a reorganization plan beyond the Feb. 28 deadline he imposed in December.
"As the time for filing a plan is drawing close, various factions are and will seek to jockey for tactical advantage," company attorneys said in court papers filed yesterday.
Chicago-based Tribune has been trying to get all of its major creditors to agree to a plan that splits the company among them and avoids a lawsuit over its 2007 leveraged buyout. Those groups include hedge funds that hold bank debt, bondholders and the banks that funded the more than $8 billion buyout.
Bondholder attorney David Rosner, with the law firm Kasowitz, Benson, Torres & Friedman LLP, declined to comment, saying he hadn't yet read Tribune's motion.
Bondholders claim the leveraged buyout that real-estate billionaire Sam Zell used to take over Tribune violated bankruptcy law. Should bondholders and lenders fail to agree on a way to divide the company, that claim would need to be litigated in court, Tribune attorneys have told Carey.
In a separate filing yesterday, the main panel of unsecured creditors asked Carey for permission to sue the parties involved in the buyout. The creditors claim that Tribune was insolvent at the time of the deal and want Carey to lower the payment priority of the bank loans that funded the transaction.
Opposed RequestHedge funds holding about $4.4 billion of the LBO debt opposed Tribune's last request for more time. They have proposed that lenders, including the hedge funds, take over Tribune's television and newspaper operations in return for canceling $8.5 billion they are owed.Tribune, the owner of newspapers including the Los Angeles Times and Chicago Tribune, filed for court protection in December 2008. The LBO dispute pits bondholders owed as much as $1.26 billion against the hedge funds, other lenders and their agent JPMorgan Chase Bank NA.The bondholders, including Law Debenture Trust Co. of New York and Centerbridge Credit Advisors, hold most of the debentures issued in 1996, which are due in 2027 and 2096. The hedge funds include Anchorage Advisors LLC, Contrarian Funds LLC, KKR Strategic Capital Holdings I LP and Latigo Master Fund Ltd.Should Centerbridge and Law Debenture prove the buyout was a so-called fraudulent transfer, they could be paid before the lenders. Shareholders may be forced to return some of the money and board members could be held liable for authorizing the transfer, under the bankruptcy code.The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).