The U.S. Supreme Court has closed the door on an attempt by creditors of the former Tribune Co. to claw back billions of dollars in shareholder profits that flowed from its 2007 leveraged buyout, about a year before the publisher filed for bankruptcy, WSJ Pro Bankruptcy reported. The justices declined to hear an appeal brought by some Tribune bondholders and retirees, who for more than a decade have been pushing for the right to sue over the buyout. Monday’s decision leaves in place earlier rulings by federal district and appeals courts that rights to pursue legal action over the Tribune buyout under state law were extinguished through the company’s 2008 bankruptcy. Efforts by Tribune creditors to sue billionaire investor Sam Zell and others behind the buyout have been closely followed by bankruptcy professionals and academics. Among those who asked the Supreme Court to take up the appeal was a group of law professors, as well as bankruptcy trustees who have clawed back billions of dollars on behalf of victims of Bernie Madoff and creditors of MF Global Holdings Ltd., Toys “R” Us and Sears Holdings Corp. The law professors broadly argued that lower-court rulings in favor of Tribune shareholders had effectively blessed risky transactions that enrich corporate insiders while loading companies with debt, threatening everyone else the business owes, including retirees dependent on pensions. The Biden administration also weighed in on the appeal. Acting Solicitor General Elizabeth Prelogar said in March that although the Second U.S. Circuit Court of Appeals was wrong when it ruled against Tribune creditors’ state law claims, there isn’t a pressing need for further review of the issue by the Supreme Court at this time.
