Zell and Other Former Tribune Executives Reach $200 Million LBO Settlement

(Reuters) – Property billionaire Sam Zell and other former Tribune Co executives and directors have reached a $200 million settlement resolving allegations of fraudulent dealings linked to the media company’s disastrous leveraged buyout in 2007.

Marc Kirschner, a litigation trustee representing Tribune creditors, filed the proposed settlement on May 31 with the U.S. Bankruptcy Court in Wilmington, Delaware. The deal requires court approval and a hearing is scheduled for July 11.

About 50 defendants, including former chief executive Dennis FitzSimons, agreed to the settlement, without admitting liability or wrongdoing.

Attorneys for Zell and FitzSimons did not immediately respond to requests for comment on Wednesday.

Zell took Tribune private in an $8.2 billion takeover in December 2007 that burdened the Chicago-based owner of the Chicago Tribune, Los Angeles Times, Baltimore Sun and superstation WGN with too much debt .

Tribune filed for Chapter 11 bankruptcy a year later, during the global financial crisis, after advertising revenues plummeted as more readers began to get their news online.

The company then split its broadcasting and press businesses into what is now Tribune Media Co, which is being acquired by Nexstar Media Group Inc, and Tribune Publishing Co. Some assets were sold.

Zell, 77, who also served as Tribune’s chief executive, called the LBO “a deal from hell.” He is worth $5.6 billion according to Forbes magazine.

Kirschner had sought damages for various alleged violations, including “illegal” dividends and fraudulent transfers, and said Tribune executives and directors received more than $107 million from the LBO.

The trustee said the $200 million payout “significantly” exceeded the amount of insurance available, and the defendants will have to split the remainder.

Kirschner is pursuing other litigation regarding Tribune.

The bankruptcy case is In re Tribune Media Co, US Bankruptcy Court, District of Delaware, No. 08-bk-13141. The multidistrict Tribune case is In re Tribune Co Fraudulent Conveyance Litigation, US District Court, Southern District of New York, No. 11-md-02296.