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No End In Sight For Tribune’s Bankruptcy Woes

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Last spring, it looked as if The Tribune Company was nearly done with its year-long bankruptcy ordeal. But as a WSJ report shows, the newspaper and TV station owner has had its hopes of concluding its reorg any time soon. The hold-up stems from Tribune’s settlement with with bondholders in April. When that agreement was reached, paving the way for what Tribune thought would be a clear exit out of Chapter 11 under the existing management, bank lenders, led by Oaktree Capital Management, complained that the bondholders’ deal would have them paying more than $400 million. Meanwhile, Chairman Sam Zell and his original backers wouldn’t have to reach into their pockets to pay a dime. Oaktree, which holds about 25 percent of Tribune’s debt, has mounted a legal challenge that could keep Tribune in bankruptcy court well past the summer.

As we noted back in February, creditors are continuing to give the Chicago company a tough time, and have filed court papers requesting the right to sue the parties involved with the company’s $8.2 billion leveraged buyout, which put Chicago real estate mogul Zell in the company’s chairman seat.

SEE ALSO: A Bankruptcy Scorecard For Newspapers

In the coming weeks,  a report on the buyout by bankruptcy-court examiner Kenneth Klee could determine how quickly Tribune’s bankruptcy case gets resolved. But even if it doesn’t find fault with Zell and his backers, Oaktree is not expected to give up the fight for some time.

Jun 24, 2010 2:15 PM ET

Tribune Photo: AP Images


Posted In: Legal, Media & Publishing, Newspapers, Money, Bankruptcy, Companies, Tribune

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