Chicago-based Tribune Co. is in talks with creditors that hold US$8.6 billion in debt as part of the company's Chapter 11 bankruptcy filing. The negotiations could see the control of the media group taken from billionaire owner Sam Zell and left instead with the group of large banks that hold the company's senior debt, according to a Chicago Tribune report Monday.

The debt rearrangement discussions are focused on a "debt for equity swap" that would leave the senior creditors with a significant majority ownership in Tribune Co.

The proposed plan is rumoured to erase a $90 million warrant held by Zell as part of his $8.2 billion privatisation of the company in 2007. This warrant gives Zell power over the company through an option to purchase 40 percent of the company for $500 million.

Zell is also a creditor to the sound of $250 million, a loan made during the privatisation; however, this is low on the claim ladder and is "unlikely (to) retain any value" as the bankruptcy claim progresses, according to the Chicago Tribune article.

Bankruptcy experts said the negotiations send messages about the creditors' lack of interest toward retaining Zell and the current management, as well as whether Zell would even want to remain without a significant stake in the company.

"It completely depends on whether the new owners see value in keeping Zell," Douglas Baird, a corporate reorganisation specialist at the University of Chicago Law School, told the Chicago Tribune. "They have to decide: Is the person at the helm when the company went into the storm the most able person to steer it out?"

It was out of the privatisation deal by Zell through which the company's debt shot out to nearly $13 billion. Within 12 months of going private in 2007 and on the back of heavy advertising declines, Tribune Co. filed for Chapter 11 bankruptcy protection.

Senior creditors have claims of some $8.6 billion, but the senior debt has been trading at about 30 cents on the dollar, putting the worth of the debt at less than $3 billion. It is therefore likely that the claims of these senior debtors will over bury others, and would likely take almost most of the company's equity to offset the debt, the Chicago Tribune reported.