The Work

September 1, 2010 12:42 PM

Jones Day Joins Tribune Hell; Plus, the Examiner's Final Bill

Posted by Zach Lowe

With the Tribune bankruptcy in danger of spinning out of control--if it hasn't already--it's time to welcome a new law firm to the group of key players in the case. Now that an explosive examiner's report has upended the proceedings, a special committee of Tribune's board of directors has asked a judge for permission to hire Jones Day to advise it on how exactly the bankruptcy should proceed, according to court records and this story from Reuters.

Tribune's board formed the special committee last month, just after a court-appointed examiner concluded the estate may have fraud claims against Tribune higher-ups and banks who engineered the disastrous 2007 leveraged buyout that sank the company. (Tribune itself will continue to be represented by Sidley Austin, according to court records.) Prior to the examiner report's release, Tribune appeared to have solid creditor support for a reorganization plan that would have given substantial control of the company to the banks that financed the leveraged buyout, since those banks became Tribune's senior creditors once Tribune filed for bankruptcy. But that support dried up after the examiner, Kenneth Klee of Klee, Tuchin, Bogdanoff & Stern, concluded the estate might have fraud claims against those same banks, according to court records and Reuters.

Without a reorganization plan acceptable to enough creditors, the case could easily launch into a new phase of prolonged litigation. The Tribune estate now says it will come up with its own plan--without consulting creditors--and see what happens from there. Jones Day will advise the four-person committee of independent directors--which is essentially meant to provide a separate set of eyes and ears on the Tribune side--in navigating this process, court records show. Jones Day's application lists four partners and two associates, with partner David Heiman submitting the highest billing rate--$900 per hour. 

In other Tribune news: The final law firm bill for the examiner's report came to about $8.35 million--far above Klee's initial estimate of around $4-$5 million but in line with a revised estimate he submitted shortly after sinking his teeth into the case, according to court records. Klee himself billed about $663,000, at $900 per hour, while lawyers at his firm billed about $4.4 million. Saul Ewing, which also worked with Klee on the report, billed a total of about $3.2 million. 

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