UPDATE 1-Tribune creditors file three reorganization plans

* Bondholders, lenders file competing plans

* Plans take aim at legal claims stemming from buyout
(Adds details throughout about competing proposals to end
company’s bankruptcy)

By Tom Hals

WILMINGTON, Del, Oct 30 (BestGrowthStock) – Three different groups
of creditors to Tribune Co filed rival proposals for ending the
newspaper publisher’s near two-year stay in bankruptcy.

The three plans, which were filed Friday with Delaware’s
Bankruptcy Court, will compete for creditor support against the
company’s proposed plan.

Like the company’s plan, the proposals allow for Tribune’s
businesses, such as the Los Angeles Times and Chicago Tribune,
to exit bankruptcy while creditors fight over how to apportion
blame for its bankruptcy.

Tribune, which also owns 23 television stations, filed for
bankruptcy just a year after real estate developer Sam Zell
bought the company with billions of dollars in debt.

Tribune has proposed a reorganization plan based on a
settlement among lenders JPMorgan Chase & Co (JPM.N: ) and hedge
funds Oaktree Capital Management and Angelo, Gordon & Co.

Under their plan those three would end up controlling the
company.

The Tribune plan tries to avoid many potential lawsuits by
putting a value on legal claims and settling with bondholders,
whose roughly $2 billion in investments were essentially wiped
out by the bankruptcy.

A hedge fund holding a large portion of those bonds,
Aurelius Capital Management, clearly has no intention of
accepting Tribune’s settlement offer and it filed one of the
competing plans.

The other plans were filed a group holding senior loan
claims and Marathon Asset Management LP and King Street Capital
LP, which hold bridge loan claims.

The plans mainly differ from the company’s by foregoing
settlements and pursuing legal claims against lenders,
particularly the banks that loaned the money for the second
part of Zell’s two-step leveraged buyout.

In July, a court-appointed examiner found the second part
of Zell’s buyout might be determined to be fraudulent.

LAWSUIT FILED

In conjunction with their bankruptcy plan, the group of
senior lenders also filed a lawsuit against JPMorgan, Merrill
Lynch, Citicorp and Bank of America. They said in the lawsuit
the banks arranged $3.7 billion in Tribune loans in 2007 they
knew the company could never repay.

“The Lead Banks knew that this financing was barred by the
terms of the Credit Agreement and it was tainted with fraud and
other misconduct,” the lawsuit, which was filed late on Friday,
said.

Representatives for the JPMorgan, Bank of America and
Merill Lynch were not immediately available to comment on the
lawsuit. Citicorp declined to comment.

The lawsuit, which claimed that the banks had no exposure
to the loans and collected more than $120 million in fees, was
filed in the New York Supreme Court in Manhattan.

The plaintiffs, including Alden Global Distressed
Opportunities Fund and Arrowgrass Distressed Opportunities
Fund, claim that the loans arranged by the defendants prevented
Tribune from paying back earlier debt obligations.

Tribune’s attempts to exit Chapter 11 have recently been
overshadowed by a management upheaval.

The company last week replaced Chief Executive Randy
Michaels, who became a target of critics following a New York
Times story that quoted numerous employees who were upset at
pervasive sexual banter and profanity among top managers.

The case is In Re Tribune Co, U.S. Bankruptcy Court,
District of Delaware, No. 08-13141.
(Reporting by Tom Hals and Mark Weinraub in Chicago; Editing
by Sanjeev Miglani)

UPDATE 1-Tribune creditors file three reorganization plans