Sam Zell Asks Court To Tell Creditors Not To Sue Him
November 19, 2010 at 4:00 AM (PT)
SAM ZELL is asking U.S. Bankruptcy Court Judge KEVIN CAREY to order that all parties to the TRIBUNE CO. bankruptcy who want to sue him for his role in the company's 2007 buyout be informed that they will lose their cases if they sue.
The WALL STREET JOURNAL reports that ZELL filed his request as an objection to the reports that will accompany the ballots for voting on the four reorganization plans being considered, asking that the ballots should add the opinion of ZELL's attorneys that the lawsuits will fail to the statement that says the company's banks, bondholders and unsecured creditors are planning to sue him.
Meanwhile, GREATBANC TRUST CO., plans to appeal last week's ruling that gave partial summary judgment to TRIBUNE employees who sued it for approving part of the deal that allowed ZELL to use the Employee Stock Ownership Plan to help finance the buyout, according to CRAIN'S CHICAGO BUSINESS. The ruling by Judge REBECCA PALMEYER said that the transaction approved by GREATBANC, okaying the purchase of unregistered stock by the ESOP, was illegal. The same judge ruled in AUGUST that ZELL and his company were not liable to pay for the demise of the ESOP.
And PALMEYER's ruling has triggered a U.S. Labor Department investigation of the ESOP and GREATBANC's role in the buyout, according to the CHICAGO TRIBUNE. If it holds up, PALMEYER's ruling would set a legal precedent under which the Labor Department could seek civil penalties against GREATBANC, according to PENN LAW SCHOOL Professor MICHAEL KNOLL.