Tribune lenders are expected to file a lawsuit by midnight against real estate mogul Sam Zell alleging the leveraged buyout he engineered caused the business to quickly collapse, The Post has learned.
Lawyers for the lenders, who are racing a Wednesday deadline to get the charges filed, will allege, sources said, that Zell’s Tribune took on too much debt and made the company immediately insolvent.
Any recoveries from the Zell suit will be combined with the proceeds, if any, from related cases and will be placed in a litigation trust to be paid out to creditors, a person close to the situation said.
Meanwhile, morale in some areas of the media company is sinking.
At WPIX Television, Channel 11 in New York, for example, layoffs and cost-cutting are taking their toll.
“There’s a whiff of desperation in the newsroom,” said a WPIX employee requesting anonymity.
In recent weeks WPIX fired Edith Rivera, a long-time $50,000 a year librarian, the employee said, replacing her with a computerized service.
“She did more than her job description says,” the source said.
The biggest WPIX shock came in October when it replaced the 10 p.m. newscast team of Jim Watkins and Kaity Tong, who been the anchors since 1998, with Jodi Applegate.
Tribune spokeswoman Jessica Berlucci said, “PIX11 remains committed to delivering the highest-quality newscast, and we currently have the right staff in place to move the ratings up.”
Indeed, ratings have improved, but that may not make the few hundred people who work at WPIX feel much better.
In an ironic twist, soon after the $11.7 billion buyout, in which Zell committed only $315 million and had the company borrow the rest — in part by borrowing against newly issued employee shares — Zell visited WPIX. A banner was unfurled on the 10th floor saying: “We Now Own the Company.”
Those shares are now worthless.