Tribune board sets panel to oversee bankruptcy
Tribune Co's board has formed a special committee to oversee the media company's bankruptcy, which unraveled this month following an investigation into its 2007 leveraged buyout.
The special committee will consist of four independent directors of the company who were appointed after real estate developer Sam Zell led the buyout of the owner of the Los Angeles Times and Chicago Tribune, according to a bankruptcy court filing.
Many creditors blame that buyout, which Zell has called the deal from hell, for the company's 2008 bankruptcy.
The committee's formation was disclosed in a court request to employ the Jones Day law firm to advise the panel. Tribune Co is being advised by Sidley Austin.
The bankruptcy had been directed by lenders and a group of senior bondholders. But the agreement between those two groups crumbled following an independent examiner's report that found billions of dollars of lenders' claims could be disqualified.
The four independent directors are Mark Shapiro, who led Six Flags Inc through its bankruptcy, Jeffrey Berg, Maggie Wilderotter and Frank Wood, according to court documents.
Unlike others on the 10-person board, the four are scarcely mentioned in a recent report by an independent examiner.
The examiner found it somewhat likely that $3.6 billion of debt held by lenders could be found to be an intentional fraudulent transfer.
That has spurred junior bondholders to attack the original settlement which denied them any recovery on their claims of more than $1 billion.
Some investors who hold loan claims were also unhappy with the original plan. They think the settlement took millions from their pockets to settle claims they argue were brought on by the actions of JPMorgan Chase & Co and the Tribune executives that led the leveraged buyout.
The company is currently trying to force a settlement among the various warring parties.
The company's attorney recently told the bankruptcy court that Tribune would file its own bankruptcy plan, without creditor input, as a way to end its 20-month bankruptcy. If creditors rejected its plan, the company's attorney warned it might begin lawsuits over the fraudulent transfer claims.
Tribune did not immediately return a call for comment.
The case is In Re Tribune Co, U.S. Bankruptcy Court, District of Delaware, No. 08-13141.
(Reporting by Tom Hals; Additional reporting by Jonathan Stempel in New York; Editing by Gerald E. McCormick, Richard Chang and Tim Dobbyn)
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