Fraudulent Conveyance

By fall 1987, not even all the king's horses and all the king's men could have helped unpaid creditors put Wieboldt Stores back together again. The venerable Chicago retailer was more than bankrupt; its merchandise had been liquidated, and its dozen or so stores shuttered early that summer.

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.

The independent examiner charged with investigating claims of "fraudulent conveyance" in the Tribune Co. bankruptcy case asked Wednesday for a 15-day extension for filing his report. That would probably delay a set of confirmation hearings on the media company's reorganization plan scheduled for Aug. 16 in U.S. Bankruptcy Court in Delaware. "The examiner's request … is not unexpected," Tribune Co. said in a statement. "Although it may delay our confirmation hearing for a short period of time, we are supportive of the request in the interest of enabling the examiner to do a thorough and complete review."

This month, a two-page letter from an angry Colorado investor arrived on Tribune Co.'s Bankruptcy Court docket. The investor, Mark Lies, was among thousands of Tribune shareholders who cashed out when the media conglomerate went private in 2007. And like those others, he stands to lose some of his winnings if junior creditors succeed in their legal bid to claw back more than $2.5 billion of the $8.2 billion in proceeds from Tribune's disastrous leveraged buyout. "What seems grossly unfair," Lies wrote to U.S. Bankruptcy Judge Kevin J. Carey, "is there doesn't seem to be any adult supervision looking out for the average investor like myself.

This month, a two-page letter from an angry Colorado investor arrived on Tribune Co.'s Bankruptcy Court docket. The investor, Mark Lies, was among thousands of Tribune shareholders who cashed out when the media conglomerate went private in 2007. And like those others, he stands to lose some of his winnings if junior creditors succeed in their legal bid to claw back more than $2.5 billion of the $8.2 billion in proceeds from Tribune's disastrous leveraged buyout. "What seems grossly unfair," Lies wrote to U.S. Bankruptcy Judge Kevin J. Carey, "is there doesn't seem to be any adult supervision looking out for the average investor like myself.

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.

In a victory for lending institutions that financed leveraged buy-outs, a federal appeals court has ruled that Security Pacific Business Credit Inc. did not participate in a "fraudulent conveyance" of Jeannette Corp. In its ruling Tuesday, the U.S. 3rd Circuit Court of Appeals affirmed a lower court's finding that the sellers, buyers and lenders--including Security Pacific--in the 1981 buyout of Jeannette did not defraud the creditors of the Pennsylvania glass-making company.

A case known as Gleneagles is a milestone in fraudulent conveyance litigation, not just because of the precedents it set, but because of the role played by the late labor leader James R. Hoffa. Hoffa was one of three men who in 1973 formed a company called Great American to buy the Raymond Group, troubled owner of extensive coal properties in Pennsylvania.

Creditors of Carter Hawley Hale Stores are seeking authority to file damage claims against the ailing retailer stemming from its controversial 1987 restructuring, documents unsealed Tuesday reveal. Separately, Dillard Department Stores has contacted Carter Hawley to request confidential information with an eye toward making a formal bid for the troubled retailer, separate bankruptcy court filings revealed.

Tribune Co. and its creditors agreed Monday to accept the appointment of an independent bankruptcy examiner in the Chapter 11 case, opening the door to further scrutiny of Tribune Chairman Sam Zell's controversial 2007 leveraged buyout of the Chicago-based media conglomerate. The examiner, who will be appointed by the U.S. Bankruptcy Court trustee in Delaware by the end of the week, will be free to inspect all aspects of the case, including the buyout and the fairness of a settlement reached this month between Tribune and some of its creditors.

Still recovering from a management scandal that claimed its chief executive a week ago, Tribune Co. is bracing for its next disruption: how to cope with legal challenges from Aurelius Capital Management and other unhappy creditors seeking to upend its bankruptcy case. Creditors face a midnight Friday deadline for submitting restructuring plans that would contest a settlement filed Oct. 22 by Tribune, its biggest senior creditors and the committee charged with representing the company's junior creditors.

After 20 months and millions of dollars in attorney fees, time is running short on Tribune Co.'s campaign to control its own destiny in Bankruptcy Court. Faced with warring creditors and ample evidence that the most powerful among them are eager to take control of the Chapter 11 process, the embattled Chicago media company's management is scheduled to file a revised restructuring plan on Friday that may prove to be the group's last, best chance to broker a friendly compromise in the chaotic case.

Former Walt Disney Co. Chief Executive Michael D. Eisner is in discussions that could lead to his return to the media spotlight — as chairman of troubled Tribune Co. The media company's largest creditors are having preliminary conversations with prospective candidates who could operate Tribune once it emerges from bankruptcy protection, according to several people with knowledge of the situation. Eisner, who has been dabbling in the digital world as an investor since stepping down from Disney in 2005, is among the candidates under consideration to replace Chicago real estate magnate Sam Zell as chairman of the reorganized company.

The independent examiner charged with investigating claims of "fraudulent conveyance" in the Tribune Co. bankruptcy case asked Wednesday for a 15-day extension for filing his report. That would probably delay a set of confirmation hearings on the media company's reorganization plan scheduled for Aug. 16 in U.S. Bankruptcy Court in Delaware. "The examiner's request … is not unexpected," Tribune Co. said in a statement. "Although it may delay our confirmation hearing for a short period of time, we are supportive of the request in the interest of enabling the examiner to do a thorough and complete review."

Tribune Co. and its creditors agreed Monday to accept the appointment of an independent bankruptcy examiner in the Chapter 11 case, opening the door to further scrutiny of Tribune Chairman Sam Zell's controversial 2007 leveraged buyout of the Chicago-based media conglomerate. The examiner, who will be appointed by the U.S. Bankruptcy Court trustee in Delaware by the end of the week, will be free to inspect all aspects of the case, including the buyout and the fairness of a settlement reached this month between Tribune and some of its creditors.

Signaling that infighting among creditors is bogging down reorganization efforts, Tribune Co. has asked a U.S. Bankruptcy Court in Delaware to give its management team until March 31 to craft a plan to exit Chapter 11 without interference from other parties. If all goes according to plan and the court agrees to extend management's "exclusivity" -- scheduled to expire at the end of this month -- Tribune will emerge from bankruptcy by May 31, 2010, according to court papers it filed Friday.

Signaling that infighting among creditors is bogging down reorganization efforts, Tribune Co. has asked a U.S. Bankruptcy Court in Delaware to give its management team until March 31 to craft a plan to exit Chapter 11 without interference from other parties. If all goes according to plan and the court agrees to extend management's "exclusivity" -- scheduled to expire at the end of this month -- Tribune will emerge from bankruptcy by May 31, 2010, according to court papers it filed Friday.

In a victory for lending institutions that financed leveraged buy-outs, a federal appeals court has ruled that Security Pacific Business Credit Inc. did not participate in a "fraudulent conveyance" of Jeannette Corp. In its ruling Tuesday, the U.S. 3rd Circuit Court of Appeals affirmed a lower court's finding that the sellers, buyers and lenders--including Security Pacific--in the 1981 buyout of Jeannette did not defraud the creditors of the Pennsylvania glass-making company.