Senior Tribune Creditors Propose Bankruptcy Exit Plan Allowing Lawsuits Against Key Players

Two major creditors in the Tribune Co. bankruptcy case filed a proposed reorganization plan for the media company Sept 17. It seeks to speed up the company's exit from Chapter 11 by giving creditors the right to sue key players involved in the 2007 leveraged buyout that wound up driving Tribune into bankruptcy court a year later.

The plan was filed by two creditors that had been at odds with each other over Tribune's previous reorganization plan, which fell apart last month after a court-appointed independent examiner concluded that some of the negotiations leading up to the company's 2007 buyout bordered on fraud. The examiner's report suggested creditors might be able to get more money by suing Tribune Chairman Sam Zell, the real estate mogul who orchestrated the deal, as well as other members of the board and some of the company's financial advisers. Under the proposed plan, a trust would be set up to collect money from any lawsuits filed after the company emerged from bankruptcy protection. One creditor behind the new proposal is the hedge fund Oaktree Capital Management, which had objected to a plan Tribune put forward in April. The other is Angelo, Gordon & Co., a distressed-debt specialist that supported the plan, under which it would have taken control of the company along with JPMorgan Chase & Co. and others.