Tribune Co. creditors itching to take a crack at Chairman Sam Zell, whose disastrous 2007 buyout of the media company landed it in bankruptcy, could get their chance today.
Lawyers for Wells Fargo are scheduled to question Zell under oath in the bankruptcy case in Manhattan, although the real estate mogul is still trying to wriggle out of the deposition.
“There’s been pushback,” a source close to the situation said. “He’ll say it’s harassment, that his testimony is irrelevant.”
Thomas Lauria, a top lawyer at White & Case best known for representing the hedge funds that challenged the government in the Chrysler bankruptcy, is expected to push Zell on why he believed the company could survive with the mountain of debt it took on to finance his deal.
Zell put down only $315 million in the $12 billion leveraged buyout and had the Tribune borrow almost all the rest.
The Tribune filed for bankruptcy less than one a year after the deal.
Now Zell and the banks that funded the buyout, including JPMorgan, have proposed a reorganization plan that would give them immunity from creditors seeking to hold them responsible for the failed deal.
In the proposed reorganization, the banks would also repossess the business.
If he appears in the private deposition, Zell is likely to argue that he got good advice and had the best of intentions, the source said..