Real estate billionaire Sam Zell is still tallying the price of his “deal from hell” from the last decade, the debt-laden buyout of the Chicago Tribune and other media properties.
Zell and about 50 cohorts, former directors and executives of the company, have agreed to settle for $200 million allegations of “fraudulent” payments arising from Tribune Co.’s 2008 bankruptcy. The company has since reorganized and split in two, separating its broadcasting stations from its newspapers, and Zell has no role at either one.
Litigation Trustee Marc Kirschner filed the settlement agreement in a Delaware federal bankruptcy court May 31. It sets a June 17 deadline for objections.
Kirschner said the settlement owed to creditors is well beyond the limits of insurance. His agreement requires the defendants to work out cash payments among themselves.
Among the defendants joining Zell in the settlement are Dennis FitzSimons, former CEO of Tribune; and former directors prominent in corporate Chicago such as Betsy Holden; William Osborn, Abbott Laboratories Chairman Miles White; and food and drink distributor J. Christopher Reyes. Also included is Timothy Knight, a Tribune Co. executive under Zell and former CEO of the Chicago Sun-Times. Knight now is CEO of Tribune Publishing.
Zell’s buyout saddled Tribune with more than $13 billion in debt. He called it the “deal from hell” because of its complexity even before the onset of an economic crisis in the U.S. and the company’s bankruptcy.
He lost the $315 million he put up as equity, amounting to only about 4 percent of the purchase price.
