Sam Zell can't be made to pay for Tribune Co. retirement fund losses, a judge ruled, rebuffing workers who claim the billionaire caused the company's employee stock ownership plan to lose value.
The workers sued Mr. Zell and his closely held company, EGI-TRB LLC, in 2008 after he took the Chicago-based newspaper publisher private in an $8.3 billion transaction. They alleged Mr. Zell used the ESOP to buy back shares, burdening it with unsustainable debt.
While the workers seek disgorgement of payments made to Mr. Zell and EGI-TRB by Tribune in the acquisition, U.S. District Judge Rebecca Pallmeyer in Chicago ruled Monday they can't because Tribune isn't directly involved in the lawsuit.
“Tribune is not a party to this case, so the court cannot order relief that would involve repayment of funds that originated with Tribune,” and not the ESOP, according to the ruling.
The publisher filed for bankruptcy court protection in Wilmington, Del., less than one year after going private. Some creditors have alleged the buyout was a fraudulent transfer because it added more than $8 billion in debt to the company while benefiting Mr. Zell and his investors.