Judge Delays Tribune Reorganization, Releases Examiner's Report
August 4, 2010 at 4:15 AM (PT)
While U.S. Bankruptcy Court Judge KEVIN CAREY delayed the start of hearings on TRIBUNE CO.'s reorganization plan from AUGUST 30th to OCTOBER 4th and creditor voting on the proposed TRIBUNE plan until AUGUST 20th, the full text of the independent examiner's report on the company's buyout was released, revealing the names of TRIBUNE executives accused of "intentional fraud."
The report, announced last week but released in full TUESDAY, was compiled by examiner KENNETH KLEE and alleged that then-Treasurer, later CFO CHANDLER BIGELOW and former SVP of Finance DONALD GRENESKO gave false assurances to the backers of the 2007 leveraged buyout that MORGAN STANLEY had issued an opinion that the company would be able to refinance its debt in 2014. KLEE said that the executives were entitled to $400,000 bonuses each if the deal closed, and GRENESKO was able to sell his shares for $4.47 million.
The examiner also faulted VALUATION RESEARCH CORP., hired to evaluate the company's solvency, as failing to question a TRIBUNE financial projection, resulting in "highly suspect" work, and the TRIBUNE board, which he said did not sufficiently evaluate the information from management and VALUATION RESEARCH CORP.