Sam Zell Sues Shareholders Over Tribune Bankruptcy

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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.

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