Tribune Bankruptcy Examiner Gets More Time for Probe of Buyout by Sam Zell
The bankruptcy examiner probing Tribune Co.’s 2007 buyout won two more weeks to investigate whether the deal is subject to a court challenge.
U.S. Bankruptcy Judge Kevin J. Carey in Wilmington, Delaware, signed an order yesterday giving Kenneth N. Klee, the examiner, until July 26 to file his report, according to court documents. The report had been due July 12.
Klee is investigating claims by low-ranking bondholders that the leveraged buyout led by billionaire Sam Zell included fraudulent transfers because it loaded at least $8.7 billion in debt onto Tribune and didn’t benefit the company. The owner of the Los Angeles Times and the Chicago Tribune filed for bankruptcy in December 2008, one year after the buyout.
Klee will give his conclusions about remedies or damages creditors might receive should the bankruptcy judge find that voidable fraudulent transfers made up part of the LBO. Klee isn’t to provide an opinion about the merits of a proposed settlement, which some creditors oppose.
After beginning his investigation in May, Klee, a University of California at Los Angeles law professor who helped rewrite the U.S. Bankruptcy Code in the late 1970s, said in a court filing that he still needs to interview more witnesses. Klee is a founding partner of the law firm Klee, Tuchin, Bogdanoff & Stern LLP in Los Angeles.
To give Tribune creditors time to digest Klee’s report, Carey extended their deadline to vote on the company’s reorganization plan, saying votes must be postmarked by Aug. 6. Objections to the plan must be filed by Aug. 13, and Cary moved a confirmation hearing for the plan to Aug. 30.
The buyout has divided creditors. The lenders behind the deal are split over whether to fight the allegations of lower- ranking creditors or settle with some of them, according to court documents.
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net.
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