Tribune Delays New Reorganization Plan to Continue Talks With Creditors
Tribune Co., the owner of the Los Angeles Times, decided not to file a new plan to exit bankruptcy because it is negotiating with creditors, Chief Executive Officer Randy Michaels told employees in an e-mail today.
The three-sentence note said the company would not amend its plan “at the present time.” Company spokesman Gary Weitman said the company wouldn’t comment further.
The decision came a week after Tribune company lawyer James Conlan said the company was being forced to rewrite its reorganization plan because of the collapse of a deal to divide ownership of the publisher among senior lenders. Conlan had told U.S. Bankruptcy Judge Kevin J. Carey in Wilmington, Delaware that the company would file a new plan by today designed to attract as much creditor support as possible.
The company’s current reorganization proposal is designed to end the threat of lawsuits against company officials and its senior lenders over Tribune’s 2007 buyout. Under the plan, those lenders would split among themselves more than 90 percent of Tribune’s equity.
JPMorgan Chase & Co. and Angelo Gordon & Co. canceled an agreement to support the plan after a court-appointed bankruptcy examiner found that senior lenders could be vulnerable to a lawsuit from Chicago-based Tribune’s lower-ranking, pre-buyout creditors.
Tribune filed bankruptcy in December 2008, one year after real-estate billionaire Sam Zell led a buyout of shareholders using more than $8 billion in new debt. Tribune also owns the Chicago Tribune, as well as broadcast stations and cable channels.
Conlan disclosed the end of the company’s alliance with senior lenders on Aug. 20.
That alliance was built on an April agreement among JPMorgan and Angelo Gordon and creditors Law Debenture Trust Co. and Centerbridge Credit Advisors to settle their differences and support Tribune’s plan of reorganization.
In early August, JPMorgan and Angelo Gordon notified the other parties by e-mail that they were quitting, citing a clause in the agreement allowing them to back out should Tribune pull its support for the original reorganization plan, according to court papers filed by Law Debenture.
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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