Uncensored Lawsuit Coming vs. Tribune Execs
Investigator Recently Found Tribune Buyout Deal May Have Amounted To Fraud
WILMINGTON, Del. (CBS) - The judge in Tribune Co.'s bankruptcy is allowing the unsecured creditors committee to file an uncensored version of a lawsuit against key players in the leveraged buyout that saddled the company with debt.
The new, unredacted version could shed light on the creditors' allegations about Morgan Stanley's role in connection with the 2007 buyout. Morgan Stanley was a financial adviser to Tribune's board in connection with the buyout engineered by real estate mogul Sam Zell, who also is a defendant in the lawsuit.
This summer, an independent investigator in the bankruptcy case found that some aspects of the buyout deal may have amounted to fraud.
Judge Kevin Carey authorized the unredacted complaint on Tuesday. The unredacted version was not immediately available to the public.
Carey also set aside the week of March 7 for a trial on whether to approve Tribune's proposed reorganization plan, or any of three competing plans filed by creditors.
Earlier this month, Cary approved a multimillion-dollar bonus plan for hundreds of Tribune Co. employees after the company agreed to exclude five top executives.
The bonus plan originally called for paying 640 employees bonuses ranging from $16.5 million to $42.9 million for this year, providing the company meet certain cash flow targets.
A government trustee monitoring the case and Tribune's official committee of junior creditors objected to the proposal because it would have handed bonuses to five executives who played a role in the leveraged buyout that took Tribune private in 2007. The committee has named the five as defendants in the lawsuit.
Meanwhile, company chief executive officer Randy Michaels resigned last month, amid allegations in a front-page New York Times article that he and his colleagues turned the Tribune Co. into a raunchy fraternity house environment characterized by frequent "use of sexual innuendo, poisonous workplace banter and profane invective."
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