June 3 (Reuters) - A group of creditors including a unit of Deutsche Bank AG (DBKGn.DE) and retirees sued former shareholders of Tribune Co , the bankrupt owner of the Chicago Tribune and Los Angeles Times, alleging the company’s 2007 buyout was a “fraud” which forced the media owner to file for bankruptcy.
“One of the industry’s most highly leveraged buy-outs — lined the pockets of Tribune’s former shareholders with $8.5 billion in cash at the expense of Tribune’s creditors and precipitated Tribune’s careen into bankruptcy,” said Deutsche Bank Trust Company Americas, one of the plaintiffs.
The Deutsche Bank unit filed the lawsuit in federal courts in Philadelphia and Texas on Thursday in its capacity as trustee for some series of senior notes.
The plaintiffs sought to recover money paid to the shareholders of Tribune, which filed for bankruptcy in December 2008, in the buyout from what it termed “fraudulent” transfers.
While the cashed-out shareholders received the principal benefit in the buyout, the target company received no benefit to offset the greater risk of running a highly-leverage firm, Deutsche Bank said in the court filing.
Noteholders of the company have unpaid claims of about $2.48 billion, exclusive of accrued post-petition interest, it said.
Retirees of the Times Mirror Co and Tribune, in a lawsuit filed in a Los Angeles county court, are seeking claims of more than $109 million in retirement benefits that they lost when the company went bankrupt.
Tribune bought Times Mirror Co, which owned Los Angeles Times and the Baltimore Sun, for $8 billion in 2000.
Bondholders of Tribune Co, which owns the WGN television superstation, recently filed a revised bankruptcy reorganization plan, which calls for less equity to be set aside to address litigation stemming from Tribune’s $8.2 billion buyout by real-estate developer and billionaire Sam Zell. [ID:nN28214819] Zell loaded up the company with about $8 billion in additional debt when he took it private in a transaction largely financed by company contributions to an employee stock option plan.
Tribune has been fighting with creditors over who is to blame for the bankruptcy and whether creditors found to be at fault should be paid what the company owes them. (Reporting by Rachel Chitra and Renju Jose in Bangalore; Editing by Vinu Pilakkott)