Huffpost Chicago

Tribune Creditors Want To Sue Sam Zell

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NEW YORK — Tribune Co.'s junior creditors are asking a bankruptcy judge for the right to sue Sam Zell and others involved in his 2007 buyout that left the company loaded with debt.

The request made by the official committee of unsecured creditors came in a court filing Monday, though it did not signal an imminent lawsuit.

The committee said the unsecured creditors do not want to interfere with ongoing negotiations with Tribune over its Chapter 11 reorganization plan. U.S. Bankruptcy Judge Kevin Carey in Wilmington, Del., appointed a mediator for the talks this month after a previous deal broke down.

Although the committee said its creditors would "stand down" while the mediation continued, the committee had to seek permission now so it can meet a Dec. 8 deadline to file a lawsuit, should one be necessary. Dec. 8 is two years from when Tribune filed for Chapter 11 protection and is the deadline under the bankruptcy code to initiate a lawsuit, the committee said.

The committee said defendants could include Zell, Tribune's board of directors and one of Tribune's financial advisers, Valuation Research Corp. Tribune Co. spokesman Gary Weitman declined to comment on the filing. Messages left with Valuation Research were not immediately returned Monday.

Tribune is the owner of the Chicago Tribune, Los Angles Times and other daily newspapers and broadcast stations. Like most newspaper companies, Tribune suffered steep advertising declines during the recession.

The unsecured creditors have assailed Zell for the $8.2 billion deal that took Tribune Co. private in 2007 and helped land it in Chapter 11 protection the following year. The deal loaded Tribune with more debt than it could handle.

A court-appointed examiner issued a report in July that found some of the negotiations leading up to the deal bordered on fraud.