Two of the most contentious bankruptcy cases of the financial crisis took major steps forward yesterday, the highlight being the release of a heavily redacted version of the examiner’s report investigating the collapse of the Tribune Company. As we detailed here in late June, various parties who oppose Tribune’s reorganization plan had pushed for an examiner’s report, hoping it would turn up evidence of fraud that could in turn reduce the amount of money owed to various creditors.

What’s the verdict? The early returns are mixed. The examiner, Kenneth Klee of the Los Angeles-based boutique Klee, Tuchin, Bogdanoff & Stern, found that part of the disastrous $12 billion leveraged buyout that took Tribune private in 2007 might indeed have constituted a fraudulent conveyance. Various mid-level creditors, including one group represented by Brown Rudnick, have been hoping Klee would conclude that the banks that financed the LBO knew or should have known it would make Tribune insolvent. That group of banks, which includes JPMorgan Chase, Merrill Lynch, and others, became Tribune’s senior creditors after providing those loans. They are slated to take control of the company in its proposed reorganization plan. Any finding that they committed fraud would imperil their claims and free up money (or, possibly, equity in Tribune) for other creditors.

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