Billionaire Sam Zell sued former shareholders of the bankrupt publisher Tribune Co., claiming he should be paid along with other creditors should a court rule the 2007 buyout he engineered was a fraud.
The suit, filed by the Zell-controlled company EGI-TRB LLC, defends the buyout as legitimate while also attempting to preserve Zell’s ability to collect money should a court disagree.
“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 said in court papers filed in state court in Chicago yesterday.
Tribune, owner of the Los Angeles Times, the Chicago Tribune, television stations and cable channels, filed bankruptcy one year after Zell used borrowed money to buyout shareholders for $8.3 billion.
Abigayle Pfeiffer, a spokeswoman for shareholder Robert R. McCormick Foundation, didn’t immediately respond to a voicemail message seeking comment about the lawsuit.
Pre-buyout creditors including hedge fund Aurelius Capital Management LP claim the buyout was a so-called fraudulent conveyance because it put so much debt on Tribune the company couldn’t survive. Aurelius helped devise a strategy to file dozens of lawsuits against shareholders in state court.
The case filed by Zell is EGI-TRB LLC V. ABN Amro Clearing Chicago LLC et al. The bankruptcy case is In re Tribune Co., 08-bk-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).