• by Erik Sass  @eriksass1, August 14, 2009

Sam Zell's days as chairman and CEO of the Tribune Co. may be numbered, according to a report in the Chicago Sun-Times, as its two main creditors plan to oust Zell, take over the company and perhaps sell off some or all of its assets. While Zell has a few months' reprieve -- his plan for leading the company out of bankruptcy isn't due until November -- the real-estate mogul will probably be relieved to transfer responsibility for the ailing newspaper company.

Tribune carries $13 billion in debt, more than half of which -- $8.6 billion -- was assumed in the deal engineered by Zell to take the company private as an employee-owned business in 2007. The combination of a long-term decline in newspaper ad revenues with the recession and accompanying credit crunch forced Zell to declare bankruptcy in December 2008.

He was recently granted an extension on the filing date for his bankruptcy reorganization plan, to late November. But if Zell's plan is viewed as unfeasible, or the company fails to meet goals outlined under the plan, the bankruptcy court can still decide in favor of an alternative plan presented by creditors.

While the details of the creditors' plan remain hazy, sources cited by the Sun-Times implied that they might dismember the company and sell off its various divisions. This could include separate auctions of the flagship Chicago Tribune, Los Angeles Times, Baltimore Sun and various broadcast properties. The Chicago Cubs sports franchise was not included in the initial Chapter 11 bankruptcy filing. A creditor takeover would also do away with Zell's warrant to buy up to 40% of the company, which is the basis of his control.

Tribune isn't the only newspaper publisher that is feeling a hangover from rampant borrowing during the credit bubble earlier this decade. After declaring bankruptcy, Journal Register Co. was turned over to its creditors earlier this year. They are said to be trying to take control of Philadelphia Newspapers, which publishes The Philadelphia Inquirer and Philadelphia Daily News.