A group of Tribune Co. lenders who opposed the newspaper publisher’s alliance with JPMorgan Chase & Co. (JPM) and two hedge funds withdrew its proposal to reorganize the company.
The group of so-called step one lenders filed court papers today in U.S. Bankruptcy Court in Wilmington, Delaware, announcing its intention to abandon its reorganization plan, one of four proposals for bringing the company out of bankruptcy. That leaves three competing plans that creditors will begin voting on this month.
“We are not pursing our plan,” step one lender attorney Evan Flaschen said in an e-mail. He declined to answer specific questions about why the group was no longer pursuing its proposal.
The step one lenders held debt that was used in the first part of the two-part buyout that took the company private in 2007 using more than $8 billion in loans.
Another group of lenders, led by JPMorgan and the hedge funds Angelo Gordon & Co. and Oaktree Capital Management LP are sponsoring one of the three remaining plans and are supported by Chicago-based Tribune. The other two plans are backed by lower ranking creditors.
Tribune spokesman Gary Weitman declined to comment.
The plans differ in how to split up ownership of Tribune once it exits bankruptcy next year and on how they deal with lawsuits over who was to blame for the buyout, lead by real estate billionaire Sam Zell.
Tribune filed for bankruptcy in 2008, one year after the buyout. The company owes creditors about $13 billion. Tribune, which owns the Los Angeles Times, the Chicago Tribune, television stations and stakes in cable channels, is now worth about $6.75 billion, according to court records.
A court-appointed examiner concluded that lower-ranking creditors were likely to win a lawsuit over the buyout.
The bankruptcy case is In re Tribune Co., 08-bk-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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