WILMINGON, Del. (CN) – At a status hearing this week, U.S. Bankruptcy Judge Kevin Carey acknowledged that mediation between Tribune Co. and its creditors was “on the brink of going, I think, in a very bad way.” Carey gave the fractious creditors of Tribune an Oct. 15 deadline to submit competing Chapter 11 reorganization plans for the embattled media giant.
This is the third deadline extension granted in the arbitration proceedings for Tribune, which became insolvent in 2008 a year after the Sam Zell-led leveraged buyout mired the company in debt.
If mediation fails there could be “three or four or five or more” Chapter 11 plans filed, Carey noted, so he also set Nov. 9 for a disclosure statement hearing on those plans.
Regarding the continuing mediation, Judge Carey commented that “Judge Gross is doing his usual thing, which is keeping at it until he’s convinced that the last breath has gone out of a possible resolution.”
The two-year deadline for Tribune to exit bankruptcy proceedings is two months away. Creditors are battling over a company with $6 billion in assets and $12 billion worth of debt.
Senior creditors of Tribune are expected to own the company after it emerges from bankruptcy. But talks of replacing present management have already started, including rumors that former Walt Disney chief executive Michael Eisner will run the company. He dispelled those rumors this week by saying that he is not interested in the job.
A New York Times story on Tribune CEO Randy Michaels, published in Wednesday’s edition, may expedite that change in management. Through interviews with former employees, the critical story portrays the Tribune workplace culture under Michaels as “a frat house, complete with poker parties, juke boxes and pervasive sex talk.”
Sam Zell hired Michaels and the new management team, who came mainly from a background in radio not newspapers, to “breathe innovation and reinvention into the conservative company,” the article says. New York Times writer David Carr writes that “reinvention did not go well.”
Michaels released a memo to Tribune staff, according to the LAObserved, that trys to debunk Carr because Carr “believes that decisions about the company’s management are about to be made, and he wants to influence those decisions.”