Tribune Bondholders Demand Court Examine Zell’s Buyout For Possible Fraud
Tribune bondholders are accusing Chairman and CEO Sam Zell of fraud in his $8.2 billion deal to take the company private as part of their efforts to halt a bankruptcy plan unfavorable to them. While the filing isn’t likely to succeed, as the WSJ notes, the bondholders could succeed slow down the bankruptcy proceeding, which now likely is on a trajectory for control to be transferred to its primary lenders including J.P. Morgan Chase and Bank of America Corp.‘s Merrill Lynch. The bondholders making the claim have about 18 percent of Tribune’s bond debt.
The bondholders charge that the takeover essentially left the company insolvent, in particular that a group of senior lenders, including J.P. Morgan Chase and Merrill Lynch, engaged in a leveraged buyout that they ought to have known would result a Chapter 11 filing.
SEE ALSO: Tribune To Sell Control Of Cubs, Wrigley Field To Ricketts Family For $845 Million
The court filing was made by Law Debenture Trust Company of New York on behalf of the bondholders. It’s not exactly clear who the bondholders are, but the WSJ speculated that they’re probably a group of funds that purchase the debt of financially shaky companies.
Posted In: Legal, Media & Publishing, Newspapers, Money, Bankruptcy, Companies, Tribune

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