UPDATE 2-Tribune creditors seek to file suit over buyout

Mon Feb 1, 2010 11:13pm EST

* Creditors seek to sue over 2007 leveraged buyout

* Tribune seeks extension of exclusivity period

* Tribune working to file reorganization plan this month (Adds details from internal memo)

By Emily Chasan

NEW YORK, Feb 1 (Reuters) - Creditors of bankrupt U.S. newspaper publisher Tribune Co (TRBCQ.PK) are seeking approval to sue the parties involved with the company's 2007 leveraged buyout, according to court papers on Monday.

According to a motion filed in the U.S. bankruptcy court in Delaware, the company's official committee of unsecured creditors is seeking approval to file a draft of its proposed complaint so it may begin to deal with claims arising out of the buyout.

The creditors did not specify the parties they seek to sue.

The publisher of the Chicago Tribune and Los Angeles Times filed for bankruptcy in December 2008 after going private in an $8.2 billion deal led by real estate magnate Sam Zell that resulted in the company having $13 billion in debt.

Zell resigned as chief executive last month after two years at the helm, but remains chairman.

Separately, Tribune asked the bankruptcy court for an extension of its time to have the exclusive right to file its reorganization plan. It said it is working to file the plan before Feb. 28.

"We are nearing the date when we will file plan, but we are asking to extend our period of exclusivity to June 8, 2010, so that we can keep everyone focused on getting to one solution," the company wrote in an internal memo to employees. The memo was obtained by Reuters from a source involved with the matter but unauthorized to share an internal company memo.

"Also today, the UCC filed a motion asking for the right to bring litigation regarding claims of fraudulent conveyance related to Tribune's 2007 going-private transaction. It is not unusual for creditors in a bankruptcy to pursue negotiations and litigation simultaneously; litigation is often part of a negotiating strategy," the memo said.

Tribune, whose properties also include 23 local television stations, had run into some resistance from lenders last year when it sought a similar extension.

Its lenders had said then they wanted to offer their own plan to reorganize the company.

A court hearing on the two requests is set for Feb. 18.

The case is In re: Tribune Company, U.S. Bankruptcy Court, District of Delaware, No. 08-13141. (Additional reporting by Robert Macmillan; editing by Carol Bishopric and Ian Geoghegan)