Creditors Seek to Recover Tribune Payments

     WILMINGTON, Del. (CN) – Creditors of the Tribune Co. seek to recover more than $18 million in payments the company made to lawyers, advisers and other professionals who helped it file for bankruptcy in 2008. The official committee of unsecured creditors asked federal bankruptcy Judge Kevin Carey for permission “to commence, prosecute and settle” recovery actions on the company’s behalf.




     The firms that received payments include Sidley Austin LLP, Tribune’s lead attorney in its bankruptcy proceedings, and PricewaterhouseCoopers, the company’s financial adviser in 2008.
     The committee wants Judge Carey to grant it the authority to either toll recovery actions or “to commence, prosecute and settle” claims against the firms that received payments from Tribune within 90 days of its bankruptcy petition.
     Tribune has not yet consented to the committee’s standing to recover the money, according to the creditor’s motion. Because of inherent conflicts, Tribune would not be able to sue its own lawyers to recover the payments it made to them, the motion states.
     This would be the third adversary lawsuit brought by the committee of unsecured creditors against the so-called “preference defendants.” The first proceeding was filed against the banks, lenders and advisers who participated or benefitted from the 2007 leveraged buyout of Tribune. The second proceeding was filed against Sam Zell and Tribune’s management, directors, officers and shareholders who benefitted from the buyout.
     On Tuesday, Judge Carey authorized the release of an unredacted version of the adversary complaint against key players in the 2007 leveraged buyout that left the company crippled with debt. The impetus for the lawsuits came from a report filed by a court-appointed bankruptcy examiner in July, finding evidence that the leveraged buyout might have been a fraudulent conveyance and that creditors might be able to recover billions of dollars through litigation.
     Carey also tried to get the four disparate groups that are filing bankruptcy exit plans to release a single disclosure statement, which will be sent to creditors for a vote.
     He said the statement “oughtn’t to be a herculean effort” to put a single plan together instead of four, and told the groups that he might write the document himself.
     The judge also scheduled a hearing for March 7 to decide which of the four bankruptcy plans to approve.
Tribune, owner of the Los Angeles Times and Chicago Tribune, is nearing the end of its two-year bankruptcy stay, which is set to expire in December.
     The motion was filed by Adam Landis of Landis Rath & Cobb LLP and Graem Bush of Zuckerman Spaeder LLP.

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