Tribune's "four-ring circus" to go to creditor vote

WILMINGTON, Delaware Mon Dec 6, 2010 6:58pm EST

WILMINGTON, Delaware (Reuters) - Bankrupt newspaper publisher Tribune Co will enter the home stretch of its reorganization this week after a judge said he expects to clear the way for creditors to vote on how to end the Chapter 11 case.

The company, which owns about 20 broadcasters as well as the Los Angeles Times and Chicago Tribune, also said it wants to investigate its former chief executive Randy Michaels for allegedly deleting sensitive emails and data from his company-issued laptop.

Delaware Bankruptcy Court Judge Kevin Carey told a Monday hearing he anticipated the parties would make changes to documents and he would issue an order so ballots could be sent to creditors.

The creditors will begin voting around December 22 on the four proposed plans for reorganizing the company, an unprecedented number for a case this large.

The company dashed into court protection less than a year after real estate developer Sam Zell led a buyout of the company with $8 billion of debt, a transaction he has called the "deal from hell."

The competing reorganization plans differ in their approaches to legal claims stemming from the leveraged buyout and bankruptcy, which potentially wiped out the value of billions of dollars of bonds and other debt.

All four plans essentially let the company bring its operations out of bankruptcy while a trustee pursues legal claims.

"This is a process I will not let get out of control," said Carey, responding to a description by one of the main lawyers in the case that Tribune was a "four-ring circus."

"I shudder to think what lies ahead," Carey said.

The voting puts the company on track for an extremely contentious March hearing at which the judge could pick a winning plan, determining how to split billions of dollars.

DELETED EMAILS

In a court filing on Friday, the company said no materials could be recovered from Michaels' laptop while 15 emails were recovered from his phone after a forensic examination.

Michaels could not be reached for comment. A Tribune lawyer at Monday's hearing declined to comment.

The company said it had asked its professionals to identify and preserve any emails sent to or from Michaels and was in the process of making a similar request to other parties in the bankruptcy proceeding.

Michaels resigned from Tribune in October after a series of embarrassing news stories emboldened critics who said he tolerated a sexist and hostile workplace. He was replaced by a four-member committee.

At the hearing on Monday an attorney for bondholder Aurelius Capital Management, which has proposed one of the four plans, cited the destruction of Michaels' emails as part of the hedge fund's argument for expanded discovery.

Aurelius wrote in court documents that Mark Shapiro, who was appointed chairman of the four-member committee that replaced Michaels, said during a deposition he regularly deleted emails and shredded hard copies of documents.

Shapiro led theme park operator Six Flags Inc through its bankruptcy before being replaced this year.

The case is In Re Tribune Co, U.S. Bankruptcy Court, District of Delaware, No. 08-13141.

(Additional reporting by Santosh Nadgir in Bangalore; Editing by Phil Berlowitz)

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