Sam Zell Sues Tribune Shareholders
His suit argues that the chairman of the media company should be paid along with other creditors should a court rule that his buyout of the firm was a fraud.
Tribune Co. chairman Sam Zell has sued former shareholders of the bankrupt media firm that he acquired and took private in 2007, arguing that he should be paid along with other creditors should a court rule the buyout he engineered was a fraud.
The suit defends the buyout as legitimate while at the same time looking to preserve Zell’s ability to collect money - "in excess of $225 million" - should a court disagree, Bloomberg News reported.
The lawsuit was filed by Zell-controlled company EGI-TRB in state court in Chicago, it said.
“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 argued in court papers, according to the report.
Tribune, owner of the Los Angeles Times, TV stations and cable channels, was forced into a bankruptcy filing about a year after Zell's $8.3 billion deal for the firm that had burdened it with debt.
Pre-buyout creditors claim that the deal was a so-called "fraudulent conveyance" because it put so much debt on Tribune that the media company was doomed to bankruptcy.