Tribune Creditors Sue; More Execs Out
November 2, 2010: Tribune's tribulations continue, as a group of unsecured creditors files suit against Chairman Sam Zell, former CEO Dennis FitzSimons, Tribune board members, and "virtually all the key principals involved in an $8.2 billion buyout" in 2007, Fox News reports.
The news comes as no surprise; the unsecured creditors were earlier given the go-ahead to pursue legal action over the deal, and reorganization plans currently under consideration include a litigation trust to address such claims.
One of the two complaints filed by the unsecured creditors says the buyout, which left Tribune with crippling debt, was "tainted from start to finish." A bankruptcy examiner appointed by the court found irregularities in the negotiations leading up to the buyout.
Citigroup, one of the secured creditors named in the suit, said the complaints are "without merit."
Additionally, more Tribune executives have departed in the wake of the resignation of CEO Randy Michaels and his replacement by a four-member executive committee.
As previously reported, Tribune Interactive President Marc Chase, COO Jeff Kapugi, and SVP/Sales Carolyn Gilbert have exited, along with Tribune Tower facilities manager John Phillips, and his wife, VP/Sales Betsy Phillips. All are former Clear Channel employees brought in by Michaels.
Crain's Chicago Business today reports that Tribune Interactive VP/Research & Marketing John Martin -- a former head of Clear Channel Interactive -- SVP/Human Resources Barb Buchwald, and human resources VPs Ken Perry and Louise Sheard all exit as well.
Additionally, Tribune Interactive is being renamed Tribune Digital, according to a memo reported by Tribune blogger Phil Rosenthal, and will be headed up by EVP Don Meek. He'll keep duties as EVP/GM of Tribune365.
As has been widely reported, Michaels' departure came after weeks of controversy that began with a New York Times profile alleging Tribune operated with a sexist, "frat house" atmosphere under his leadership, followed a few days later by a controversy over a risque e-mail sent by then-Chief Innovation Officer Lee Abrams.
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