Tribune investors sue banks that arranged financing

A group of investors in bankrupt Tribune Co sued JPMorgan, Merrill Lynch, Citicorp and Bank of America, claiming the banks arranged $3.7 billion in loans in 2007 they knew the company could never repay.

"The Lead Banks knew that this financing was barred by the terms of the Credit Agreement and it was tainted with fraud and other misconduct," said the lawsuit, which was filed late on Oct 29. The lawsuit, which claimed that the banks had no exposure to the loans and collected more than $120 million in fees, was filed in the New York Supreme Court in Manhattan. The plaintiffs, including Alden Global Distressed Opportunities Fund and Arrowgrass Distressed Opportunities Fund, claim that the loans arranged by the defendants prevented Tribune from paying back earlier debt obligations.