Bondholders in Tribune's Chapter 11 bankruptcy case are suing the banks that financed the media company's 2007 leveraged buyout, claiming they knew that the resulting debt load would leave Tribune insolvent.
The lawsuit was filed late Thursday by Wilmington Trust Co., agent for holders of $1.2 billion in bonds purchased before real estate mogul Sam Zell led Tribune Co.'s $8.2 billion buyout.
The bondholders claim the deal was fraudulent because the debt mainly went to cash out Tribune stockholders. They argue that the banks' secured claims should be disallowed, or be paid only after the bondholders' unsecured claims are satisfied.
Defendants in the lawsuit include JPMorgan Chase Bank, Merrill Lynch Capital Corp., Citicorp, Bank of America and Morgan Stanley & Co.
Representatives of Tribune and the banks declined comment Friday.
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