Ten years after newspaper publisher Tribune Media Co. defaulted on billions of dollars in debt, a federal judge is pushing for settlement talks between big shareholders that cashed out in a leveraged buyout and creditors that were burned in the bankruptcy that followed, the Wall Street Journal reported. The push came from Judge Richard Sullivan, a New York federal judge presiding over the $8 billion Tribune LBO lawsuit, a classic of the bankruptcy genre, in which creditors say the deal that enriched shareholders doomed them and the publisher. After years of wins and losses for both sides, the case is no closer to trial, and Judge Sullivan is trying to drive peace talks. On Monday, he received a 21-page letter from lawyers caught up in the litigation, who generally agree mediation or settlement talks may be in order, but maybe not right now. “I was curious about how close we are to the end. It doesn’t sound like we are very close,” Judge Kevin Carey commented at a hearing Tuesday in the U.S. Bankruptcy Court in Wilmington, Del. He has presided over Tribune’s bankruptcy case since 2008 and was warned he might have to keep the proceeding alive for years to come. The fight taking place in New York federal court grew out of the bankruptcy, which came less than a year after the buyout in 2007. The Chicago company blamed a soured economy and tough media climate. Creditors blame the LBO architect Sam Zell, Wall Street advisers and company leaders, and major shareholders that drained cash out of Tribune and left the company mired in debt.
