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Tribune Settles Some Legal Claims In Hopes Of Exiting Chapter 11 Bankruptcy

Posted By admin || 15-May-2010

The Tribune Company Hopes to Settle Legal ClaimsThe Tribune Co. announced that it has struck an agreement with some of its creditors in an effort to avoid litigation that could prolong its Chapter 11 bankruptcy case. During its Chapter 11 bankruptcy case several groups of creditors have filed complaints against Tribune saying that the company knew that if it took a $8.3 billion leveraged buyout it would force the company into bankruptcy.

Tribune said Thursday that it has come to an agreement with one such unsecured creditor, Centerbridge Partners, to settle any potential claims. Centerbridge, which holds 37 percent of Tribune's outstanding bond debt, would get a 7.4 percent stake in Tribune, paid in a combination of cash, stock and debt if the court approves Tribune's plan.

Tribune said J.P. Morgan and Angelo, Gordon & Co., two of the financial firms that stand to take over a 91 percent stake in the company under the plan, have also agreed to the settlement.

However it is a strong chance that the settlement agreement with Centerbridge won't settle all of the claims pending against the bankrupt company.  An entirely different group of creditors who hold $1.2 in Tribune bonds have also filed a complaint against the bankrupt company alleging that Tribune's banks engaged in fraudulent conduct by helping the company with the 2007 buyout.

Tribune, which publishes several newspapers such as the Los Angeles Times, Chicago Tribune and the Baltimore Sun, along with several TV and radio stations, has been in Chapter 11 bankruptcy since December 2008.  If it is unable to come to some type of settlement agreement with its creditors, their financial fresh start could be jeopardized.  Most worrisome are the charges that the company took on debt with no intention of repaying it or with the full knowledge that it would drive the company into bankruptcy.  If it is found that they in fact did conduct a fraudulent leveraged buyout, they could be forced to repay all of the debt associated with that deal.

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