• Bloomberg, Monday, May 24, 2010 12:13 AM

Tribune Co., which owns the Los Angeles Times and Chicago Tribune, will seek a creditors' vote to settle allegations that Chairman Sam Zell and the company's lenders violated bankruptcy law and left the publisher insolvent when they organized a 2007 buyout. U.S. Bankruptcy Judge Kevin J. Carey gave interim approval to Tribune's request to mail its bankruptcy exit plan to creditors for a vote.

Some lower-ranking creditors have alleged the buyout was a fraudulent transfer because it added more than $8 billion to Tribune's debt while benefiting only Zell and the shareholders. Creditors must vote on the plan by July 30. Carey will take the results into consideration when he decide whether to approve the reorganization. Junior noteholders oppose the plan, claiming a settlement only benefits lenders, Zell and a group of other senior creditors. They want to hold Zell and JPMorgan Chase financially responsible for Tribune's bankruptcy.

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