Tribune creditors propose revised bankruptcy plan
Tribune Co bondholders led by hedge fund Aurelius Capital Management on Monday filed a revised bankruptcy reorganization plan for the media company, hoping to overcome objections by senior creditors.
The revised plan calls for lower sums to be set aside to address litigation stemming from Tribune's $8.2 billion leveraged buyout in 2007, which was led by real estate developer Sam Zell.
Some senior creditors had complained that too much of the equity in a reorganized Tribune would be tied up while the litigation, which could last for years, proceeds.
Tribune owns newspapers including the Chicago Tribune and Los Angeles Times, and has other media properties including the WGN television superstation. It filed for Chapter 11 protection from creditors in December 2008.
U.S. Bankruptcy Judge Kevin Carey this month described Tribune's bankruptcy case as deadlocked, as the two creditor groups remained unable to agree on how to split the company's assets, according to the Chicago Tribune.
Tribune has backed a reorganization proposed by senior creditors led by JPMorgan Chase & Co, Oaktree Capital Management and Angelo, Gordon & Co. Bondholders including Aurelius oppose this plan.
The senior lenders had argued that putting too much of the company's value in a litigation trust would hold the company and many smaller creditors hostage to years of court battles, the Tribune said.
Under the bondholders' revised plan, about 20 percent to 29.5 percent of Tribune's value would be held in the litigation trust, down from 50 percent to 65.4 percent in their earlier plan.
The company backs the senior lenders' plan under which competing claims would be settled by the bankruptcy court, avoiding future litigation.
Senior lenders that financed the leveraged buyout would compensate bondholders and other unsecured creditors for some of their losses and control the company when it exits bankruptcy.
Carey had said on March 7 he might reject both proposals.
James Sottile, a Zuckerman Spaeder lawyer who has argued for the senior creditor group's plan, was not immediately available for comment.
The case is In re Tribune Co, U.S. Bankruptcy Court, District of Delaware, No 08-13141.
(Reporting by Dena Aubin; Additional reporting by Jonathan Stempel)
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