Tribune Creditors Lose|Bid to Replace Counsel

     WILMINGTON, Del. (CN) – A bankruptcy judge on Wednesday denied a request by Tribune Co.’s unsecured creditors to replace its lead law firm for the upcoming mediation between the media giant and its creditors.

     The Official Committee of Unsecured Creditors of Tribune had sought to disqualify Chadbourne & Park LLP because of alleged conflicts of interest, as the firm also represents JPMorgan Chase, Citigroup and Morgan Stanley in the bankruptcy proceedings.
     One of the creditors, Aurelius Capital Management LP, filed a motion to disqualify Chadbourne & Parke frpm not only the upcoming mediation, but also from any leveraged buyout cause of action or settlement.
     In its motion, Aurelius asked, “How can Chadbourne ethically have an involvement in any matters to the LBO [leveraged buyout]-Related Causes of Action when its clients are significant targets of such investigation?”
     Tribune managers and others have been accused of enabling the fraudulent conveyance of the company’s 2007 leveraged buyout led by real estate mogul Sam Zell.
     Aurelius wanted Zuckerman Spaeder to replace Chadbourne & Parke as counsel for the unsecured creditors during mediation, which is set to begin Sept. 26.
     U.S. Bankruptcy Judge Kevin Gross will preside over the mediation effort to develop a reorganization plan that’s palatable to creditors and Tribune managers.
     The Tribune Co., publisher of the Chicago Tribune and the Los Angeles Times, filed for Chapter 11 bankruptcy in December 2008, listing $7.6 billion in assets and $13 billion in liabilities.

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