Tribune bankruptcy judge gives company more time

By Michael Oneal
Posted Aug. 17, 2010 at 5:24 p.m.

The judge in Tribune Co.’s bankruptcy case suspended a Friday voting deadline on the company’s proposed reorganization plan, responding to a request for more time from Tribune Co. lawyers.

Citing “vigorous negotiations” toward a new settlement in the case, Tribune last Friday asked U.S. Bankruptcy Judge Kevin J. Carey for more time to work toward a more consensual agreement.

In a hearing Tuesday, lead Tribune Co. attorney James Conlan of Sidley Austin said that he is “walking a tightrope” between trying to keep to the court’s schedule and brokering an agreement between the company’s various bickering creditor groups.

He said it was not clear a new agreement could be reached and emphasized that he didn’t want to give an impression that one is close. But he asked Carey to give him until another hearing on Friday to propose new dates for voting and, possibly, confirmation hearings based on the state of the settlement talks. Carey agreed.

Tribune’s bid for an extension came as the various 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 certain 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 its motion 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.

Carey said Tuesday he has the week of Nov. 8 open for confirmation hearings if Tribune Co. sees fit to ask for an extension until then.

In a statement Tuesday, the company said, “We are committed to trying to emerge from Chapter 11 by the end of the year.”

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