Zell, other former Tribune executives reach US$200 million settlement over LBO
REUTERS: Real estate billionaire Sam Zell and other former officers and directors of Tribune Co have reached a US$200 million settlement resolving allegations of fraudulent transactions related to the media company’s disastrous 2007 leveraged buyout.
Marc Kirschner, a litigation trustee representing Tribune creditors, filed the proposed settlement on May 31 with the U.S. bankruptcy court in Wilmington, Delaware. The accord requires court approval, and a hearing is scheduled for July 11.
Roughly 50 defendants, including former Chief Executive Dennis FitzSimons, agreed to the settlement, without admitting liability or wrongdoing.
Lawyers for Zell and FitzSimons did not immediately respond on Wednesday to requests for comment.
Zell took Tribune private in an US$8.2 billion buyout in December 2007 that saddled the Chicago-based owner of the Chicago Tribune, Los Angeles Times, Baltimore Sun and WGN superstation with too much debt.
Tribune filed for Chapter 11 bankruptcy protection a year later, during the global financial crisis, after advertising revenue tumbled as more readers began getting their news online.
The company later split its broadcasting and newspaper businesses into what are now Tribune Media Co, which is being bought by Nexstar Media Group Inc, and Tribune Publishing Co. Some assets have been sold.
Zell, 77, who also served as Tribune’s chief executive, has called the LBO the “deal from hell.” He is worth US$5.6 billion according to Forbes magazine.
Kirschner had sought damages for various alleged breaches, including “unlawful” dividends and fraudulent transfers, and has said Tribune officers and directors received more than US$107 million from the LBO.
The trustee said the US$200 million payout “significantly” exceeds the amount of available insurance, and the defendants will have to split the remainder among themselves.
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Kirschner is pursuing other litigation over Tribune.
The bankruptcy case is In re Tribune Media Co, U.S. Bankruptcy Court, District of Delaware, No. 08-bk-13141. The multidistrict Tribune case is In re Tribune Co Fraudulent Conveyance Litigation, U.S. District Court, Southern District of New York, No. 11-md-02296.
(Reporting by Jonathan Stempel in New York; Editing by Steve Orlofsky)