Tribune Co. asks bankruptcy judge for more time

By Michael Oneal
Posted Aug. 16, 2010 at 3:30 p.m.

Tribune Co., citing “vigorous negotiations” toward a new settlement with its creditors, asked the judge in its bankruptcy case for more time to work out a reorganization plan that “would maximize consensus” around a deal.

The move comes as the various bickering parties in the case realign their positions based on the findings contained in an independent examiner’s report studying claims surrounding the Chicago media conglomerate’s 2007 leveraged buyout.

That report, issued late last month, suggested that the $8.2 billion LBO orchestrated by Chicago real estate magnate Sam Zell may have rendered the company insolvent from Day 1, lending support to various creditors’ arguments.

Initially, that caused U.S. Bankruptcy Judge Kevin J. Carey at a hearing Aug. 3 to extend deadlines for voting and confirmation hearings in the 20-month-old case, pushing its possible resolution from the end of this month into October.

But in a motion filed late last week, Tribune Co., which owns the Chicago Tribune, said that it would be “imprudent” to hew to those new deadlines, which would require creditors to vote on the plan by this Friday. The reason, a source said, was that negotiations may lead to an altered settlement with different terms that would require more study by the creditors expected to vote on them.

Tribune Co. didn’t ask for a specific new schedule, leaving it to the court’s discretion. Carey will consider the motion at a hearing in Delaware late Tuesday afternoon.

Another recent filing in the case, however, seemed to indicate that arriving at a full consensus will still be a challenge. The filing came Aug. 10 from an entity formed by Zell in 2007 to invest in Tribune Co., which has a leftover deeply-subordinated claim against the company for $250 million.

The Zell claim was rendered worthless in the original plan along with another subordinated class known as the PHONES debt. But the filing warned that Zell would fight any arrangement stemming from new negotiations that paid the PHONES creditors, who hold around $1.2 billion in debt, ahead of the Zell entity.

In a complex legal argument, the Zell entity claimed the PHONES debt is subordinated to the Zell claim. An attorney for Wilmington Trust Co., the agent for the PHONES debt, couldn’t be reached for comment.

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  1. Warren Aug. 16, 2010 at 3:57 pm

    Well done, Mr. Zell. You took the “World’s Greatest Newspaper” and turned it into the Sun-Times, without the runny ink of course. And after ruining the paper you try some convuluted argument to get in front of other creditors. Well done, Sir.

  2. jack Aug. 16, 2010 at 4:07 pm

    The other day I received two cals from the credit dept.of the Tribune asking me to pay my bill because it was late .This was on August 12 2010. I checked the invoice they sent me. The bill is due September 3,2010.
    Each call asked me very aggressivly if I would pay either online or autopay from my credit card. I declined.The tribune must need cash . This is the first time in over twenty years of home delivery that this has happened.
    I called the customer service dept. to complain about this aggressive sales tactic. I tld the representative if it happens once more, I would cnacel my subscribtion and only purchase the Sunday tribune.

  3. jack (me) Aug. 16, 2010 at 4:24 pm

    Now it appears that Zell is the one who is stalling. It is a fundamental part of bankruptcy law that “debt” owed to the owner is not debt, but “equity” in financial terms. Also, as someone pointed out in comments to the Crain’s piece, Zell’s position does not have equity in the Chancery sense, since if there was a fraudulent conveyance, he was the one that engineered it.

  4. jack (me) Aug. 16, 2010 at 4:26 pm

    Note that I am not the same jack as the one above, which is why I append “me.” I wouldn’t have subscribed to the print version in any event.

  5. SueSantoFan Aug. 16, 2010 at 6:55 pm

    Way to go Sam. Fraud sound like a good word. The Colonel may roll over in his grave once more. This once great institution has gone to dumps. I fell sorry for the staff. They are very good at what they do. I like my Trib and would be lost without it after 60 years.

  6. I_heart_schadenfreude Aug. 16, 2010 at 7:39 pm

    Sure, let Sammie Zell go the same banks repossessing middle class American homes and ask for more time. Then kick his parasitic *** out on the street along with all the “financial gurus” that thought this was a good deal in the first place.

    Millionaires always win in the US, middle class always loses. Just look at the repiglicans, trying to increase the US deficit by $36 BILLION to cut taxes for the rich while passing on a $40 tax cut to middle class Americans. If this isn’t class warfare, I don’t know what is.

  7. Vinicius de Mello Aug. 16, 2010 at 10:17 pm

    Tribune can’t get its business straight and it’s op-ed folks tell us what is what. Bah

  8. Doug Aug. 17, 2010 at 1:27 pm

    Sounds like Sammy and Randy are stalling. I guess they need more time to move around and hide the money. To create shell companies. While they’re at it, maybe they can move more than just back office operations to Bangalor, whoops–I mean Dallas. Maybe they can put editorial over there too. And while they’re at it, move WGN Radio, and the rest of whatever rubble is left of this once good company.

  9. Stuck Bondholder Aug. 17, 2010 at 4:55 pm

    These TRBCQ bonds were once considered “blue chip” investments and were fositerd to thousands of working middle class investors as such. Why Zell as late as October of 2008 was assuring the bond holders that it was tough going but he had the expertise and financial muscle to make good on these by pulling the Tribune through. And interest was paid till that time. Then in December of 08 he dropped the BIG B bomb! So much for his assurances.

    We paid over a $100 for these bonds years ago and deserve to get at least a big chunk of this back over the idiot and crooked BIG BANKS that backed his screwy deal. Bonds have priority over stock and equity and crooks. At least in the old America they used to!

  10. Occu Pant Aug. 18, 2010 at 12:53 pm

    Personal & Confidential
    All Tribune current and former employees should write a letter to the bankruptcy Judge informing him of their outrage, at how this case is being handled. Executives should not be allowed to add a payout to themselves in the reorganization plan. Espcecially when former employess who were laid off did not get this severance package, and I am sure future laid off employees will also not get this severance package.
    Former employees post on this site exactly what you received when you were laid off. Current employees read the postings. Current employees, post on this site what you know about current actions being taken by the current management that may seem shady. Spending huge amounts for equipment, having to buy it from friends of Zell and Michaels, when you can get it for a lower cost elsewhere. Using expense accounts for non-company business, etc. This is just like a divorce, certain parties will try to hide wealth from the court!
    Creditors, read these postings, and respond to what you think the Bankruptcy Judge should do about it, and if you are one of the Creditors who will have a controlling interest in Tribune after the Bankruptcy what are you going to do about it? Let these employees know you are no as dishonest as the current management running the Company and I am sure they will work hard for you.