Sam Zell Sues Shareholders Over Tribune Bankruptcy
December 22, 2011 at 7:04 AM (PT)
Billionaire SAM ZELL is suing former shareholders of the bankrupt media entity TRIBUNE CO., demanding that he be paid along with other creditors if a court rules that the 2007 buyout he engineered was a fraud, BLOOMBERG reports. Filed by ZELL's new company, EGI-TRB LLC, the suit defends the buyout as legitimate, yet also claims that ZELL is entitled to collect money should a court disagree.
"If it is determined that the selling shareholder payments represent fraudulent conveyances, EGI-TRB is entitled to recover from such transfers or conveyances in an amount in excess of $225 million," Zell’s attorneys asserted in court papers.
Tribune, owner of the LOS ANGELES TIMES, THE CHICAGO TRIBUNE, television stations, radio station WGN-A/CHICAGO and cable channels, filed bankruptcy one year after ZELL bought out shareholders with $8.3 billion of borrowed money. Pre-buyout creditors such as hedge fund AURELIUS CAPITAL MANAGEMENT LP claim the buyout was a "fraudulent conveyance" because it loaded an unsustainable debt on TRIBUNE. AURELIUS subsequently was instrumental in filing dozens of lawsuits against shareholders in state court.