So much for the hope of a relatively quick and painless exit from bankruptcy for Tribune Co. A reorganization plan that would have turned over control of the Chicago-based media conglomerate to a group of lenders that includes JP Morgan Chase & Co. has reportedly fallen apart after an independent examiner's report prompted creditors to reassess the strength of their claims.

Now Tribune must scramble to come up with a new plan that will satisfy all relevant parties if it's to avoid lengthy litigation that could delay its emergence from Chapter 11 indefinitely. Until recently, that was a relatively simple task, with the company's management holding an exclusive right to propose a restructuring plan. But that right expired earlier this month, leaving open the possibility of competing plans, each with its own faction of supporters.

The present mess stems from 2007, when real estate mogul Sam Zell executed a $8.2 billion buyout of Tribune Co., whose properties include the Chicago Tribune, Los Angeles Times and Baltimore Sun. The massively-leveraged acquisition was finalized in December of that year; by December 2008, Tribune was filing for bankruptcy.

The rapidity of the company's collapse led to fraud allegations from former employees (whose retirement funds were wiped out) and bondholders alike. An independent examination authorized by the bankruptcy court vindicated those allegations to some extent, saying that a large chunk of the financing behind the deal was tainted by fraud, and an independent assessment of the company's health obtained as a precondition of the deal's closing was deeply flawed.

Those findings gave new hope to parties who would have seen their stakes wiped out by the reorganization plan that, until today, enjoyed consensus. Tribune has said it will file an amended proposal by Aug. 27, and threatened its own lawsuits if its reorganization plan is opposed.

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catski300

It is all about the world being a mess and people scooping up the problems. You can complain or you can take advantage of this government's spending! Medicare............Failing Medicaid..................Failing Social Security.............Failing U.S. Post Office.................Failing Cash For Clunkers..............HUGE FAILURE Govt Run Insurance………..WHAT DO YOU THINK Fannie Mae and Freddie Mac......JUST ANOTHER FAILURE What did you get out of these programs? Probably nothing but you PAID DEARLY for them as well as your grandchildren will. Thanks Uncle Sam for taking a budget of 7 billion in 1940 and ballooning it into almost 12 trillon in 2010. I have set up a place that the poor and middle class in the country can start to get their fair share of the giveaways. It is our turn to have a piece of the action. Just google CASH TEACHER all one word or two...doesn't matter to get started. Click on the very first link and you are there...they are that good! Then you will find the ways to cash in. Go to the STOCKS and the MAKE MONEY ONLINE sections to see things that the corporate fat cats don't want us to know. You want to see how the rich do it...GO THERE

August 21 2010 at 9:49 AM Report abuse +1 rate up rate down Reply