Tribune Bondholders Sue Lenders
March 5, 2010 at 10:05 AM (PT)
Bondholders in bankrupt TRIBUNE CO. have sued the company's lenders, alleging that the banks' loans led to the bankruptcy. WILMINGTON TRUST CO., as agent for the lower-ranking creditor bondholders, filed the suit in U.S. Bankruptcy Court in DELAWARE on THURSDAY (3/4), naming JPMORGAN CHASE, MERRILL LYNCH, CITIBANK, BANK OF AMERICA and MORGAN STANLEY and charging that the defendants knew that the $8.6 billion in loans would drive TRIBUNE into bankruptcy and would mean that bondholders would not get paid the $1.2 billion they are owed.
TRIBUNE is working on submitting a reorganization plan, but the lower ranking creditors are claiming that the buyout that put the company in SAM ZELL's control was fraudulent and left their bonds valueless.