Report: Tribune Mediation Talks Break Down

Reorganized ... Disorganized

The CHICAGO TRIBUNE is reporting that mediation talks in TRIBUNE CO.'s reorganization have broken down, raising the prospect of several competing plans being submitted to U.S. Bankruptcy Court. The paper cites "sources close to the situation" as saying that at least three groups, one headed by AURELIUS CAPITAL MANAGEMENT and another representing the Official Committee of Unsecured Creditors, are prepared to file plans for TRIBUNE's reorganization. 

"It's kind of a free-for-all right now," a source told the TRIBUNE. "Some parties have really dug in the heels."

The breakdown of mediation talks comes in the wake of the NEW YORK TIMES' front page article by DAVID CARR chronicling alleged "frat house" behavior at the company under CEO RANDY MICHAELS (NET NEWS 10/6), which MICHAELS has categorically denied; the TRIBUNE's sources said that the article is likely to be used by creditor groups to discredit the company's present management and challenge the payment of up to $43 million in 2010 management incentive bonuses. "Someone is going to make something of it," a bankruptcy attorney in the case told the TRIBUNE. "Why not? You never know what impact it will have with the human being in the robe."

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