As Tribune Co. closes in on confirmation of its chapter 11 plan, attention has turned to the big-ticket litigation over the failed leveraged buyout that drove the media company to bankruptcy more than three years ago, Dow Jones Daily Bankruptcy Review reported yesterday. As the largest shareholder to cash out in the deal, raking in more than $1 billion, Chicago's McCormick Foundation "is obviously defendant number 1" in lawsuits seeking to claw back LBO winnings, David Zensky, attorney for major Tribune creditor Aurelius Capital Management, said on Friday at the opening of day two of confirmation hearings. Aurelius and other creditors who will be left with less than full payment under Tribune's plan are counting on a big payoff from the suits against McCormick, other shareholders, Tribune leaders and former leaders, and professionals who advised on the deal. A bankruptcy investigation turned up evidence the LBO was tainted with fraud, setting the stage for creditor lawsuits. Estimates in court papers claim the litigation could be worth hundreds of millions of dollars for Tribune creditors.
