Wells Fargo Bank, as agent for the holders of a $1.6 billion bridge loan to Tribune Company, has asked the bankruptcy judge overseeing the Chapter 11 case to slow down. The agent says more time is needed to assess the proposed reorganization plan and to digest the lengthy report filed last week by court-appointed examiner Kenneth Klee.
The agent notes that Klee found evidence of intentional fraudulent conveyance in step two of the financing that took Tribune Company private. That has the agent bank questioning whether the Chapter 11 plan, with its releases for various Tribune officers, should be approved as its stands. “If intentional fraud has been identified, it is hard to imagine that the Plan would give these officers releases without requiring them to make any contribution to the Settlement,” the bank said in a filing with the court.
A hearing is set for August 30th on confirmation of the reorganization plan. Wells Fargo Bank is asking that the judge postpone that hearing for at least 90 days to give the bridge lenders time to study the Klee report and “assess the myriad conclusions and findings” it contains. If the motion is granted, it would continue the Chapter 11 process for Tribune Company past the two-year mark.
Also in recent days, Tribune Company amended the proposed Chapter 11 plan to include golden parachutes for 43 of its top executives. According to a story in the flagship Chicago Tribune by Michael Oneal, the lucky reporter assigned to follow the legal proceedings (where the document count recently passed 5,200), CEO Randy Michaels would get two and a half times his annual salary as severance should the new board of directors decide his services were no longer required. COO Gerry Spector would get two and a quarter his annual salary. No price tag for the severance packages was included in the court filing, the story said.