The judge in Tribune Co.’s stalemated bankruptcy case appointed a mediator Wednesday to try to forge a settlement of legal claims stemming from media company’s disastrous 2007 leveraged buyout.

The move comes after a reorganization plan previously filed by Tribune Co. management unraveled in the wake of an independent examiner’s report that supported many of the claims.
The order, issued by U.S. Bankruptcy Judge Kevin J. Carey in Delaware, calls for a non-binding mediation process to begin immediately and to be run by Carey’s colleague on the Delaware court, U.S. Bankruptcy Judge Kevin Gross.

Each of the parties in the case — or combinations of parties  — will have until mid-September to provide Gross with a five-page plan it thinks provides a fair resolution of the legal issues surrounding the 2007 buyout, which junior creditors have argued rendered Tribune Co. insolvent as soon as it closed.

The parties include Tribune Co.; JPMorgan Chase (as agent for the senior lenders to the buyout); hedge fund Angelo, Gordon & Co.; a group of senior lenders led by hedge fund Oaktree Capital Management; another group of senior lenders; owners of bridge loan debt represented by Wells Fargo Bank; junior creditors led by Law Debenture Trust Co., Centerbridge Credit Advisors and Deutsche Bank Trust Co.; a legal entity controlled by Chicago real estate magnate Sam Zell, who led the 2007 buyout; and a group of junior debt holders led by Wilmington Trust Co.

The order provides no timetable for trying to wrap up an agreement and as a non-binding mediation, participation is voluntary. Gross will have the power to set the rules and the agenda. He also will be allowed to consult with Kenneth Klee, the Los Angeles lawyer who was independent examiner in the case.

Carey had set aside dates in early November for confirmation hearings to consider the plan submitted by Tribune management. But those dates and hopes for a resolution of the 20-month case by year end appear to be slipping away.