By: E&P Staff
Tribune Co., facing a challenge from dissident creditors who claim its 2007 going-private deal made the Chicago media giant insolvent from day one, is asking U.S. Bankruptcy Court in Delaware to give its management team another three months to craft a reorganization plan on its own.
In filings with the court made late Friday and Saturday, Tribune also asked for a Dec. 1 status meeting of all creditors, including the dissident bondholders, to help smooth its way out of Chapter 11.
Separately, Tribune in a memo to employees said its cash flow for 2009 will reach nearly $400 million, about double what the company had estimated.
In its request for “exclusivity,” Tribune said it could emerge from bankruptcy by May 31 if its management team is given more time to work on an exit plan alone. Management’s exclusivity is due to expire on Nov. 30.
The request takes place as the group of bondholders is conducting its own investigation into the $8.2 billion going-private deal engineered by Chicago real estate mogul Sam Zell, who is now Tribune’s chairman and CEO. The bondholders say the deal was a “fraudulent conveyance,” a term of bankruptcy law indicating the transaction was doomed from the start.
The bondholders accuse its lead lenders of taking big fees to work on the deal, which left Tribune with an unsustainable $13 billion debt. If the bondholders are successful in their argument, the claims of the senior lenders could be wiped out, leaving more assets to be shared by subordinated creditors.