Published on Wednesday, 21 December 2011 08:08
Tribune Company Chairman Sam Zell has filed a lawsuit against former Tribune Company shareholders in an attempt to recover $225 million of money he claims is owed to him. In the claims of the two lawsuits, both filed this week with the Cook County Circuit Court, Zell, himself a junior creditor in the bankrupt company, is owed the money for the same reason other junior creditors have sued -- citing evidence that the $8.2 billion leverage buyout was fraudulent and knowingly forced the media giant into bankruptcy.
The bizarre twist in that logic is that it was Sam Zell himself that organized that leveraged buyout that his lawsuits now claim as fraudulent. As a true creditor of Tribune Company, he is legally allowed to join up with the many other lawsuits against the former shareholders who profited from the sale and the company itself.
Sam Zell has always publicly denied that his pushing the 2007 leveraged buyout forward damaged the company. The lawsuits also contain wording that Zell believes that the former shareholders he is suing should be allowed to keep their proceeds from the buyout. However, should a judge rule that the buyout did indeed happen due to a fraudulent conveyance, Zell wants to stake his claim in to regain some or all of his lost money.
According to the Chicago Tribune details
of this strange twist of the ongoing soap opera that is the Tribune Bankruptcy, the true goal of these two lawsuits is not necessarily to reclaim millions of lost dollars, but to convince other junior creditors to settle their claims. If Zell's lawsuits are approved, his $225 million would greatly lesson the money the other creditors could receive. The Zell lawsuits appear to be more about leverage than recovery.
If the lawsuits do indeed get approved, Aurelius Capital Management, the New York-based hedge fund company that leads the battle for the junior creditors, and who has been fiercely fighting the Tribune-backed plan to exit bankruptcy, would surely put up a legal battle against Zell's suit, disputing his right to money after it would be proven that Zell was himself the main architect of the Tribune Company bankruptcy.
The Chicago-based Tribune Company is the country's biggest media corporation in bankruptcy. It filed for bankruptcy in December 2008, with approximately $13 billion in debt, just one year after real estate developer Sam Zell completed the $8.2 billion leveraged buyout of the corporation.
Tribune Company owns twenty-three television stations, thirteen newspapers, various magazines, one radio station and many other websites and companies. Locally, among the company's properties owned include the Chicago Tribune, RedEye, Hoy, Chicago Magazine, Naperville Magazine, WGN-AM, WGN-TV, CLTV, and WGN America.