Tribune Co. creditors, objecting to the company's proposal for getting out of bankruptcy protection, submitted competing plans that could ignite another legal battle.
The alternatives filed late Friday by creditors including Tribune bondholder Aurelius Capital Management didn't come as a surprise. After a creditor dispute derailed the original reorganization plan that Tribune Co. filed in April, the bickering continued while a court-appointed mediator tried to negotiate a compromise.
Tribune Co. found common ground with enough creditors to file its revised plan last week. Tribune Co. spokesoman Gary Weitman said the company still considers its plan to be the best for creditors.
"We will continue to study these alternative plans, but still believe that the company plan, with its broad creditor and official committee support, is the best option for treating our stakeholders fairly and allowing the company to emerge from bankruptcy as quickly as possible," he said in an e-mailed statement.
Friday's filings erect a new hurdle that could prevent Tribune Co. from attaining its goal of exiting Chapter 11 bankruptcy protection by the end of the year. The owner of several major newspapers, including the Chicago Tribune and Los Angeles Times, and more than 20 radio and TV stations already has spent nearly two years operating under the supervision of a bankruptcy court in Delaware.
A battle like this has loomed as a possibility since Tribune Co.'s exclusive right to file a reorganization plan expired in early August.
With multiple plans to consider, U.S. Bankruptcy Judge Kevin Carey is likely to have to schedule more hearings to determine whether they satisfy the legal standards that would allow them to be voted upon by Tribune Co.'s creditors.
Tribune Co. has been in upheaval since real estate mogul Sam Zell took the company private in an $8.2 billion buyout in 2007. The debt-laden deal closed just as newspapers throughout the country entered an advertising slump that depleted their main source of income.
To make ends meet, publishers cut their staffs and, in the most extreme cases, filed for bankruptcy protection. Tribune Co. did so in December 2008 with about $13 billion in debt.
Tribune Co. probably wouldn't have faced such dire circumstances had not Zell piled on so much debt to gain control of the company. That has triggered allegations that shady dealings caused the financial disrepair. An independent examiner concluded in July that some aspects of the Tribune buyout had bordered on fraud, further agitating some creditors.
Earlier Friday, a group of Tribune Co. creditors filed a lawsuit alleging that the company's stint in bankruptcy protection might have been averted if not for the greed of big banks who saddled the business with more debt than it could afford to repay.
The complaint filed in New York state court seeks to hold the banks behind the buyout of the company responsible for the financial wreckage left behind by the deal. The lawsuit's targets are JPMorgan Chase & Co.'s bank, Bank of America Corp.'s Merrill Lynch Capital Corp., Citigroup Inc.'s Citicorp and Bank of America. Attempts to reach the banks late Friday were unsuccessful.
The drama hasn't been confined to the courtroom. Last week, Tribune Co. CEO Randy Michaels _ a former radio industry executive brought in by Zell _ resigned following published reports that he had cultivated a lewd office culture.
A committee of four executives from Tribune Co., Chicago Tribune and Los Angeles Times is running the company until a reorganization plan wins court approval and brings in a new ownership.
Tribune Co.'s plan would hand ownership to several of its largest creditors, including JPMorgan Chase, distressed debt specialist Angelo, Gordon & Co. and hedge fund Oaktree Capital Management.
Even after getting out of bankruptcy, Tribune Co. believes its publishing revenue will decline for several years, although not as severely as it has been. Publishing accounts for about two-thirds of the company's revenue, which is expected total $3.2 billion this year.