Tribune, the Sam Zell-owned newspaper chain, has hired bankruptcy advisers in an attempt to stave off potential bankruptcy filing, reports NYT, citing sources. It is using investment bank Lazard and the law firm Sidley Austin, to try and restructure its crippling debt and assess its options, the story says. The WSJ, which reported the news first, says Tribune could file for Chapter 11 bankruptcy protection as early as this week….

Last month, the company reported a Q3 loss of $124 million, compared with earnings of $84 million for the same period last year. Publishing advertising revenues slid 19 percent ($111 million), and as part of that, interactive revenues dropped 7 percent ($4 million). The company has about $12 billion in borrowings, and stayed ahead of the interest payments as a result of asset sales, but the economy and resulting ad decline continues to hit it hard. The company doesn’t have enough cash to pay $1 billion in interest payments this year, and also owes a $512 million debt payment in June.

The bankruptcy possibility was raised back in June by S&P analyst Emile Courtney. For all the gory details on the Tribune saga, read our dedicated Tribune section.

Update: Another story in the NYT has some more: Rating agencies say Tribune’s short-term problem is not making debt payments, but complying with a quarterly requirement that its main debt from its acquisition of the company not exceed nine times its EBITDA. A failure to comply by end of this month would mean Tribune had technically defaulted, even if it continued to make payments, and that sometimes can lead to bankruptcy.

Chicago Tribune does its own story, and quotes a company spokesperson: “It’s an uncertain and difficult environment…We haven’t made any decision. We’re looking at all of our options.”

Photo Credit: Asten.