WILMINGTON, Del. (CN) – Tribune Co. and two senior lenders have emerged with a new bankruptcy exit plan following two days of mediation. Court-appointed mediator Kevin Gross said Tribune, Oaktree Capital Management and Angelo Gordon & Co. “reached agreement on a plan of reorganization that will settle claims surrounding ‘Step 1′” of the Tribune’s 2007 leveraged buyout.
Although Gross “does not consider the Mediation to be closed,” he said in a court filing Tuesday, he “is confident that the Proposed Plan will lead to additional constructive discussions between and among the Debtors and other parties.”
“We remain confident that additional settlements will be reached,” restructuring officer Don Liebentritt said on Tribune’s behalf.
The new plan is similar to an earlier reorganization plan proposed by Oaktree and Angelo Gordon, which allows Tribune’s operating businesses to exit bankruptcy before resolving the legal claims surrounding the 2007 leveraged buyout.
That means Tribune, owner of the Chicago Tribune, Los Angeles Times and 23 TV stations, will be owned and operated by Oaktree, Angelo Gordon, JPMorgan and other senior creditors. The junior creditors will have to fight over a litigation trust set up to deal with those claims that say the Sam Zell-led buyout was an example of a “fraudulent conveyance.”
Tribune is also seeking claims related to the 2007 buyout. In a filing Friday, Tribune asked U.S. Bankruptcy Judge Kevin Carey for permission to hire Novack & Macey LLP to settle or litigate claims against Morgan Stanley, which provided advisory services for the buyout.
Tribune seeks an Oct. 22 hearing on the request.
Morgan Stanley advised the Tribune board’s special committee that reviewed the 2007 transaction. Former Tribune officers and Morgan Stanley disagree on what was said regarding discussions about the solvency of the company following the second part of a two-part financing for the buyout.