Tribune, creditors committee object to Aurelius' request for trustee

By Lisa Kerner

Charlotte, N.C., Oct. 15 - Tribune Co. and its official committee of unsecured creditors filed separate motions objecting to unsecured creditor Aurelius Capital Management, LP's Sept. 14 motion asking the court to appoint a Chapter 11 trustee to oversee Tribune's bankruptcy case, according to two Friday filings with the U.S. Bankruptcy Court for the District of Delaware.

A hearing is set for Oct. 22.

Aurelius, on behalf of its managed funds, is one of Tribune's largest pre-leveraged buyout bondholders.

Tribune, in its filing, said Aurelius based its motion almost exclusively on circumstances surrounding the 2007 leveraged buyout transaction that returned the debtors to private ownership. In addition, the company denied Aurelius' claim that the debtors "are hopelessly conflicted" and incapable of overseeing the bankruptcy cases.

The creditors committee said the appointment of a trustee is "unwarranted" since the company, the committee and major senior lenders announced an agreement in principle for a plan of reorganization, including the settlement of several claims related to the LBO.

In requesting the trustee appointment, Aurelius expressed doubt that between Sept. 20 (when mediation submissions are due) and Dec. 8 (the deadline to file avoidance actions), a consensual settlement would be fully negotiated and documented; a disclosure statement would be revised, approved and distributed; and a new plan would be voted upon, confirmed and take effect.

Aurelius said appointment of a trustee would extend the deadline for filing avoidance actions one year, but the deadline for filing non-avoidance actions would not be extended.

Plan includes creditors committee

As previously reported Tribune announced support for an agreement reached by the creditors committee, Oaktree Capital Management, LP; Angelo, Gordon & Co, LP; and JPMorgan Chase Bank, NA on a plan that will settle certain claims surrounding both Step 1 and Step 2 of the transaction.

The company's special committee of its board of directors approved the settlement, which was expanded to include the creditors committee.

According to Tribune, the settlement expands upon the previously announced settlement with Oaktree and Angelo Gordon with respect to Step 1 and resulted from court-ordered mediation overseen by U. S. Bankruptcy Court Judge Kevin Gross.

On Tuesday the company said it expects to file a plan of reorganization and disclosure statement that incorporate elements of settlements related to the going-private transaction.

Tribune, a Chicago-based media company, filed for bankruptcy on Dec. 8, 2008. Its Chapter 11 case number is 08-13141.

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