A U.S. Appeals Court has ruled that creditors of the Tribune Company cannot claw back the $8 billion paid to the multimedia company's public shareholders nearly a decade ago in a buyout that was blamed for its bankruptcy, Reuters reported yesterday. The ruling stems from the sprawl of litigation sparked by the 2007 buyout led by real estate mogul Sam Zell. A little over a year later, the publisher of the Chicago Tribune and Los Angeles Times filed for bankruptcy. Tribune emerged from bankruptcy in 2012 and junior creditors were repaid about a third of what they were owed. However, in a bid to recover more, they have spent years battling through the courts, using sometimes novel legal theories. In 2007, Tribune borrowed $11 billion and then used the money to buy its publicly traded stock and take the company private. Under the creditors' view, borrowing the money rendered Tribune insolvent and public shareholders received more than reasonable value for their stock; therefore, some of that money could be potentially clawed back as a fraudulent conveyance. The U.S. Appeals Court for the Second Circuit in New York, however, found the buyout was protected by the Bankruptcy Code's "safe harbor."
