Tribune lenders drop competing bankruptcy plan

By @ibtimes on

A group of lenders has withdrawn its plan for reorganizing newspaper owner Tribune Co, leaving two proposals for ending the company's two-year stay in bankruptcy, according to court documents.

The group known as the Bridge Lenders agreed to withdraw its plan and support Tribune's proposal, which is based on a settlement among lenders JPMorgan Chase & Co and hedge funds Oak Tree Capital Management and Angelo, Gordon & Co.

The Bridge Lenders agreed to accept $64.5 million in cash as well as attorney fees and their share of distributions from trusts that will pursue legal claims, according to a mediator's report filed on Friday.

Tribune owns the Chicago Tribune, Los Angeles Times and around 20 broadcasters and other newspapers.

Late last year, four competing plans were proposed for reorganizing the company, which is highly unusual in a bankruptcy case. In most bankruptcies, creditors are asked to approve or reject one plan.

The two remaining plans differ in their approach to legal claims stemming from the company's 2008 bankruptcy, which came less than a year after a leveraged buyout put real estate developer Sam Zell in control of the company.

The company-supported plan proposes to settle many of the legal claims stemming from the bankruptcy, which wiped out billions of dollars of bonds.

A competing plan filed by a group of bondholders led by Aurelius Capital Management proposes an aggressive legal strategy to recover billions of dollars from lenders who they blame for funding the Zell-led buyout.

Delaware bankruptcy judge Kevin Carey has scheduled hearings for March to decide which plan he will confirm.

The case is In re Tribune Co, U.S. Bankruptcy Court, District of Delaware, No. 08-13141.

(Reporting by Tom Hals; Editing by Tim Dobbyn)

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