Tribune creditors file three new restructuring plans

Junior creditors of Chicago-based Tribune, owner of major newspapers including the Chicago Tribune and Los Angeles Times, along with 23 TV stations, tabled three new restructuring plans on Friday, contending the company-sponsored plan filed on 220 October by the biggest senior creditors Oaktree Capital Management, Angelo, Gordon & Co., and a group of senior lenders led by JP Morgan Chase & Co, was aimed at acquiring the company.

Under the Tribune-Oaktree-Angelo Gordon plan, lenders such as J. P. Morgan Chase & Co. that provided loans for the company's $8.2-billion buyout in 2007, and others that bought debt from that deal would gain control of Tribune Co. through ownership of stock in the restructured company.

Many of the junior creditors own debt incurred before the 2007 buyout led by Tribune Chairman and Chicago real estate magnate Sam Zell, and they contend they are being shortchanged because the deal pushed the company into bankruptcy

Tribune has endured numerous financial difficulties since it was acquired by real-estate developer Sam Zell in an $8.2 billion deal that took the business private. The financing of his transaction involved the creation of an employee stock program that has incurred a significant amount of debt (See: Tribune goes private; Sam Zell named chairman and CEO).

Consequently, in January 15, 2009, it filed voluntary petitions to reorganise under Chapter 11 in order to achieve necessary cost reductions and create a financially viable business (See: Tribune files for bankruptcy protection).

One new plan submitted on Friday, which calls for all-out litigation, came from a group of junior bondholders led by Aurelius Capital Management L.P., Wilmington Trust Co., Law Debenture Trust Co., Deutsche Bank Trust Co., and a subordinate group of investors who hold junior bonds known as the "Phones". Together those groups represent more than $2 billion in claims.