By: Deborah Yao, The Associated Press
A federal bankruptcy judge on Thursday allowed some parties to examine a confidential report that criticizes the debt-laden buyout of Tribune Co. just weeks before a key hearing on the newspaper publisher’s plan to leave Chapter 11.
Judge Kevin Carey said parties in the case may look at the full version of the report filed by a court-appointed examiner, but a decision on whether the public will have access will be discussed at a hearing on Tuesday. The report concludes that talks leading up to the buyout of Tribune had bordered on fraud.
The version first made available to the public is missing hundreds of pages of information because some bank lenders objected to the release of confidential information. The full document, which is more than 1,000 pages, includes internal e-mail and correspondences, as well as personal information such as home addresses.
The judge’s decision will let Tribune, its debt holders, creditors and bankers read the full report. Currently, none of the parties has access to the full report.
Creditors had asked the judge to let them see the full report, arguing that they need access to all the information before they can vote on the reorganization plan. Tribune can emerge from bankruptcy protection once a reorganization plan is approved by the court after a consensus among the parties. The plan would turn over control of the company to debt holders.
In his report Monday, court-appointed examiner Kenneth Klee criticizes some of those lenders, including JPMorgan Chase & Co., for acting irresponsibly in loading Tribune up with debt, even as it became more apparent that the company would have trouble paying it back. JPMorgan spokesman Brian Marchiony declined to comment on the case.
Tribune, which owns the Los Angeles Times, Chicago Tribune and other newspapers, as well as TV stations, filed for bankruptcy protection in 2008, a year after real estate mogul Sam Zell led a buyout that took the company private and saddled it with debt. A steep downturn in newspaper advertising hampered the company’s ability to generate enough cash to make required debt payments.
Klee raised questions about the behavior of Tribune’s management, board and some of its lenders. Klee wrote in his report that he believes it’s “somewhat likely” a court would conclude some fraud had occurred in the buyout of Tribune, although he didn’t validate all the accusations. He said Tribune executives breached their fiduciary duty by piling on debt even as it became increasingly clear the company would have trouble with repayments.
Tribune officials said it agreed with some of the conclusions but not others, without offering any specifics.
In court Thursday, creditors asked Carey for more time to review the missing pages before voting on the plan.
Carey said he might extend the vote, now scheduled for Aug. 6, by a few days. But he said he won’t delay the Aug. 30 confirmation hearing, during which the Chicago-based Tribune hopes to win approval of its plan so it could emerge from bankruptcy protection by the end of the year.
Tribune’s attorneys argued that the examiner’s heavily redacted report contains enough information for an informed vote.