Tribune Bondholders Fault Zell Takeover

Disgruntled Tribune bondholders have asked a US bankruptcy judge to let them investigate Sam Zell's 2007 buyout of the newspaper-and-television chain in an effort to derail a plan that would hand the company over to its banks. "Fraudulent conveyance" is a legal term most often used in bankruptcy court, in which creditors allege a company has used assets in a way unfair to creditors. In the context of leveraged buyouts, creditors can argue a deal loaded up a company with too much debt, leaving it undercapitalized and unable to meet future obligations. The filing will seek to slow or nullify an advancing plan for Tribune to exit from bankruptcy protection with J.P. Morgan, Bank of America Corp.'s Merrill Lynch and other banks owning nearly all of Tribune in return for the banks forgiving about $8 billion in debt. Bondholders would likely receive only a sliver of new equity under the deal.