Tribune creditors plan to ask a judge tomorrow to rule on whether they have the right to sue Sam Zell and others who had a role in the $11.7 billion buyout of the newspaper publishing company that ended in bankruptcy, The Post has learned.
If the judge rules in their favor, the creditors would have until Dec. 7 to file their suit before the statute of limitations runs out. They have two years from the time the company filed for bankruptcy to bring their case.
The unsecured creditors will also back a new reorganization plan that Tribune plans to file tomorrow that would establish a litigation trust so bondholders can follow through with their suit and collect proceeds if they win the case.
Aside from contentious creditors, the company’s management woes also threaten to complicate its efforts to emerge from bankruptcy. The Wall Street Journal reported that Tribune’s board is preparing to replace CEO Randy Michaels with a four-person caretaker management team, citing people familiar with the matter.
The issue of whether creditors can pursue legal action against Zell, bank lenders and others that had a hand in saddling the company with debt has been an obstacle to reaching an agreement in the fractious bankruptcy case.
The unsecured creditors, who rank below other creditors in the line to get paid, have made it clear that they would not agree to any reorg plan that barred them from going after Zell.
Earlier reorg plans sponsored by the company have included indemnity from lawsuits for Zell, the board and others.
Lender JPMorgan is reportedly backing the new plan in exchange for immunity from the pending suit that would be brought by unsecured creditors.
More senior creditors are expected to challenge Tribune’s reorganization plan. Fighting among various groups of creditors has kept the company mired in bankruptcy for close to two years.
Tribune creditors have until Oct. 29 to file alternative proposals for restructuring the company. After he gets the plans, US Bankruptcy Court Judge Kevin Carey will try to hammer out an agreement among the warring creditors.
The unsecured creditors have alleged that the buyout was a “fraudulent transfer” because it piled $8 billion of debt on Tribune, setting the company up to fail. Zell kicked in only $315 million of the nearly $12 billion leveraged buyout in 2007. jkosman@nypost.com