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Tribune judge sets bankruptcy exit date
Bloomberg News
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Published: 10/5/2010 12:01 AM

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Tribune Co.'s creditors have until Oct. 15 to file alternative proposals for dividing up the ownership of the newspaper and television company so it can pay creditors and exit bankruptcy, a judge said today.

U.S. Bankruptcy Court Judge Kevin J. Carey set a deadline for various groups of warring creditors to file competing reorganization plans. Tribune and more than a dozen lawyers and financial advisers will meet today with a Delaware bankruptcy judge who is leading court-sponsored mediation efforts.

"We'd like to see some kind of a deal break out rather than a dozen plans get filed," said Thomas Lauria, who represents junior lenders owed $1.6 billion.

Tribune has joined two of its largest senior creditors in support a plan to divide the ownership of the company among the lenders who helped finance the publisher's 2007, $8 billion leveraged buyout. Lower ranking creditors want to sue those lenders, claiming that the buyout was a fraudulent transfer that benefited only the banks and Tribune's shareholders.

Fighting among Tribune creditors, who are owed more than $12 billion, intensified after July 27 when a bankruptcy examiner, Kenneth N. Klee, released a report that bolstered the position of lower-ranking creditors. Those creditors, including the noteholders owed $1.2 billion, said JPMorgan Chase & Co. and the other buyout lenders should lose their position among the first to be repaid because of the 2007 transaction.