By: Mark Fitzgerald
With Tribune Co.’s biggest creditors withdrawing support for its post-bankruptcy plan – and junior bondholders armed in their fight for more assets with an examiner’s report suggesting the 2007 leveraged buyout was a so-called fraudulent conveyance – the board of directors of the Chicago media giant have formed a special committee to take over the reorganization process.
The disclosure of the committee of four directors who joined Tribune’s board after the closing of the leveraged buyout came in a court filing in U.S. Bankruptcy Court in Delaware late Monday. Tribune management asked court permission to retain the law firm Jones Day to represent the four directors.
Named to the committee was Jeffrey Berg, chairman of International Creative Management Inc.; Mark Shapiro, former CEO of the Six Flags amusement park company; Maggie Wilderotter, CEO of Frontier Communications Corp.; and Frank Wood, CEO of Secret Communications.
Tribune said the decision to form the special committee followed the report by court-appointed examiner Kenneth Klee, who concluded that a court was likely to find that aspects of the deal engineered by real estate magnate Sam Zell were or bordered on fraudulent conveyance, meaning the deal, which larded $8.2 billion of debt on a company that already carried about $5 billion of debt, made Tribune insolvent from day one.
The examiner found no wrongdoing by Zell or his group, but instead pointed to an unnamed “one or more senior financial officers” in the old Tribune management.