Tribune Creditors Make Final Bankruptcy Plan Pitches

When Sam Zell took control of the Tribune Co two years ago it was hoped that he could revive the company and bail out their creditors who are owed billions of dollars and now after filing Chapter 11 protection Tribune’s creditors have made a final pitch to the company.

Under the plan a judge must decided if the billions of dollars in owned money should be paid back by the company through lawsuits or if bankruptcy is the best option based on all available circumstances.

The case, which has been stuck in court since December 2008 is the longest contentious suit in recent years and has dragged on as investors try to stop the company from claiming bankruptcy.

When Sam Zell took over the company the organization was carrying $13 billion in debt and the buyout has been deamed the “deal from hell” and that deal has led Zell’s creditors to use closing arguments to show that the brokerage of the takeover was flawed and that $1 billion in losses should be repaid because of the purchase.

Tribune representative James Conlan told Reuters:

“A consensual resolution would be optimal,” while adding that absent that agreement the company’s proposal “is the next best choice to provide a path to exit bankruptcy, and a fair one.”

Tribune company is offering to pay $480 million to noteholders, approximately 25% of the $2 billion they had invested should Chapter 11 be granted. Under the agreement investors would not be able to sue the company for further payments.

Also under the agreement, shareholders who include JPMorgan Chase & Co and Angelo Gordon & Co would own controlling interests in Tribune CO, a company worth approximately 70% of the $8.7 billion they are currently owed.