Unsecured creditors of Tribune Company have asked Federal Bankruptcy Judge Kevin Carey for permission to sue Sam Zell and others involved in the 2007 leveraged buyout of the company. The move, however, won’t impact the recently ordered attempt at mediation to find agreement on a plan for Tribune to emerge from Chapter 11 reorganization.
The motion filed this week by the Official Committee of Unsecured Creditors is largely procedural to protect their right to sue for damages. The committee says it is still investigating potential claims and studying the report of Kenneth Klee, the examiner appointed by the bankruptcy court.
The creditors want to preserve their option to sue Zell, who led the buyout, and Tribune directors and officers, as well as various large shareholders who were cashed out, the company which issued the valuation report for the buyout transactions and various other parties involved in taking Tribune Company private. The ill-fated 2007 buyout ended in a Chapter 11 bankruptcy filing in December 2008.
The potential litigation may involve claims of breach of fiduciary duty; aiding and abetting breach of fiduciary duty; professional malpractice; violation of Delaware General Corporation Law; unjust enrichment; constructive and/or intentional fraudulent transfer; mandatory subordination; and equitable subordination and/or disallowance, the motion stated, adding that there might be additional claims as the investigation continues.
RBR-TVBR observation: Our guess is that lawyers will still be recording billable hours in this case when we (and most of you reading this) have long since retired or exited the planet. As of Tuesday (9/14) the Docket in this bankruptcy case was up to document #5,684 with no end in sight.