UPDATE 2-Tribune creditors seek to file suit over buyout

* 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 (BestGrowthStock) – 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.

Investing Basics

(Additional reporting by Robert Macmillan; editing by Carol
Bishopric and Ian Geoghegan)

UPDATE 2-Tribune creditors seek to file suit over buyout