Reporting from Chicago — In a strange twist even by the standards of the tangled Tribune Co. bankruptcy, billionaire Sam Zell filed two suits against the company's former shareholders seeking to claw back proceeds from the failed leveraged buyout he led in 2007.
The suits, filed in Cook County Circuit Court by Zell affiliate EGI-TRB, piggyback on allegations by Tribune creditors that the debt-laden $8.2-billion buyout was a fraudulent conveyance, meaning it left the owner of the Los Angeles Times, KTLA Channel 5, Chicago Tribune and other media assets insolvent from the start.
That Zell is suing alongside the creditors is ironic given that he has been a principal target of their ire.
Creditors have contended that as architect of the deal and chairman of Tribune's board, Zell breached his fiduciary duty by pushing forward with the deal.
But because he owns a $225-million Tribune note, Zell is also a creditor and filed his suits Monday in that capacity.
The suits make plain Zell's belief that the fraudulent conveyance claims lack merit and that shareholders who benefited from the buyout should be entitled to their proceeds.
But if a judge were to disagree, Zell wants to preserve his rights as a creditor to collect his share of any claw-backs from shareholders, the suits said.
Zell attorney David Bradford said that his client's real aim in filing the suits is to gain leverage in his attempts to persuade the creditors to settle their disputes.