Tribune creditors want their pound of flesh from the troubled Chapter 11 media company -- $250 million pounds of financial flesh to be exact.
Just one day after a judge OK’d big 2010 bonuses for hundreds of company executives, the Committee of Unsecured Creditors asked the court for the right to claw back hundreds of millions in bonuses and stock paid out to Tribune Company officers and directors, past and present, in 2007 and 2008.
This particular set of creditors, as others involved in the 23-month bankruptcy case have before, also asked the Delaware court for permission to pursue legal action against current Tribune owner Sam Zell and possible future owners such as JPMorgan Chase, a past lender and creditor itself, for their role in the effort to take the company private in late 2008.
Internal dishonesty is what worries the creditors, say one of their lawyers.
“There are inherent conflicts that make it very difficult, if not impossible, for a company to vigorously pursue actions” against its own executives and directors," J. Landon Ellis said in Thursday’s filing
A spokesman for Tribune told TheWrap the company had no comment on the matter.
U.S. bankruptcy law gives courts the power to reverse and recoup awards granted to a now-bankrupt company’s executives and directors in the year leading up to its Chapter 11. All funds recovered are usually dispensed to petitioning creditors.
Tribune submitted its latest comprehensive reorganization plan to the bankruptcy court on Oct. 22. The plan is supported by major creditors JPMorgan Chase, New York equity firms OakTree Capital Management and Angelo, Gordon & Company and the Committee of Unsecured Creditors.
Strategically unsurprising, Thursday’s filing secures the Unsecured Creditors' legal rights to pursue further action against Zell and others if it decides to. The move doesn’t reflect a breakdown in the reorganization plan or their support for it.
Other creditors, such as bondholder Aurelius Capitol Management submitted their own reorganization plans for the company on Oct. 29.
Hearings on the various plans are expected in late Nov, with creditor voting not long afterwards … or, as has been common in this Chapter 11 saga, it could all change again.