Twenty-two months after filing for bankruptcy, Tribune may finally be one step closer to a reorganization that will take the company out of it. The financially troubled TV and newspaper owner announced Tuesday (Sept. 28) that it reached agreement with two of its largest creditors, Oaktree Capital Management, L.P. and Angelo, Gordon & Co., L.P. to settle some claims related to the 2007 going private transaction. Other claims would be placed in a special litigation trust.
The settlement follows court-ordered mediation requested by Tribune and overseen by U.S. Bankruptcy Court Judge Kevin Gross. The special committee of Tribune’s board of directors approved the settlement.
“The plan addresses two primary issues that are fundamental to a successful reorganization of Tribune,” said Don Liebentritt, Tribune's chief restructuring officer. “First, it enables the company to exit Chapter 11 and distributes the equity of the reorganized Tribune and its subsidiaries to the holders of the Initial and Incremental Term Loan claims. Second, to the extent not settled prior to confirmation, all claims identified by the Examiner's Report relating to 'Step 2' of the company’s going-private transaction are preserved and placed in a litigation trust. We remain confident that additional settlements will be reached.”
Tribune filed for bankruptcy in late 2008, just one year after Sam Zell took the company in a leveraged buyout that left the company crushed under debt. Since then, Tribune's creditors have been battling it out and pointing fingers.
The new agreement would give significant stakes in Tribune to Oaktree and Angelo, Gordon and allow Tribune to exit bankruptcy before other legal claims by other creditors are addressed.
The agreement is subject to approval by the Delaware bankruptcy court.