Definition of Irony: Sam Zell Sues Former Tribune Shareholders for Money Owed
By Chuck Sudo in News on Dec 21, 2011 10:40PM
Does anyone remember what Sam Zell was reported to have told Tribune Co. shareholder employees around the time of his 2007 buyout of the company? No? Let's remind you: “I’ve said repeatedly that no matter what happens in this transaction, my lifestyle won’t change. Yours, on the other hand, could change dramatically if we get this right.”
We now know that Zell didn't get it right and his lifestyle hasn't changed, if his recent purchase of the Elysian Hotel is any indication. But that didn't stop Zell from filing two lawsuits against former Tribune Co. shareholders to recoup $225 million.
The suits, filed by the Zell-controlled company EGI-TRB LLC, makes clear that Zell still believes the buyout was legitimate, but hedges his bets should a federal bankruptcy judge rule the buyout as fraudulent. Zell owns a $225 million Tribune note, which makes him a creditor and he wants to preserve his rights to collect what he can, should the judge rule the buyout was a fraudulent conveyance. It's a genius move, yet devilish at the same time.
The irony here is so clear a blind man could see it, given that Zell moved forward with the heavily leveraged buyout and breached his fiduciary duty in the process, making him Public Enemy No. 1 in the eyes of the former shareholders. But these lawsuits can also serve as yet another reason why Zell's whistling past the graveyard, and that his lifestyle won't change.