That’s right. Sam Zell’s EGI-TRB LLC has filed two lawsuits in an Illinois court against the former shareholders of Tribune Company. Strictly speaking, Zell is trying to claw back some of the money he paid them in the ill-fated 2007 $13.3 billion leveraged buyout which led to a bankruptcy filing by Tribune before the end of 2008, but it is mainly a negotiating tactic.
According to the Chicago Tribune, which has been closely following the legal battles of its parent company, Zell’s lawsuits based on his $225 million of deeply subordinated Tribune debt are an attempt to gain leverage in trying to settle the disputes related to the LBO. The newspaper’s story says the lawsuits actually make it clear that Zell disagrees with the claims in related suits by other creditors that the LBO was a fraudulent conveyance.
However, should the court agree with the other creditors who sued that the LBO was a fraudulent conveyance and that Zell breached his fiduciary duty because the debt-laden company was insolvent from the time of the buyout, he could theoretically be in line for a recovery along with them.
RBR-TVBR observation: The law sure is strange, isn’t it?