Former Tribune Shareholders Could Suffer Clawbacks

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Colorado investor Mark Lies was recovering from heart surgery and “grappling with the idea of what might happen to [his] remaining worth” when he received a summons in the mail in October.

The summons was from creditors, who are attempting to “claw back” more than $2.5 billion of the $8.2 billion in Tribune Company’s leveraged buyout from 2007. In this case, a clawback refers to money or benefits that are distributed, but then taken back as a result of special circumstances.

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“I have a lot of frustration in the process, as an individual,” said Lies, who declined to go into more detail due to his attorney’s guidelines. “I feel it’s unfair the way the process has gone.”

The salient frustration was outlined in a two-page letter sent to Judge Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware. In the letter, Lies said he was making no requests, but instead wanted to add a “human element” to the Tribune bankruptcy case.

“There are a lot of people who have been adversely affected,” Lies said in a phone interview with Chicago Tonight. “I think most people don’t know what to do. Now this is in the domain of big institutions to fight it out. So now, we, the small shareholders, are at risk.”

Up to 35,000 investors could receive summons like Lies, although the guidelines for these summons aren’t quite clear. When asked about the amount of shares he owned, Lies declined to disclose specifically, but said “way more than 100.”

At least $75,000 must be at stake, with parties from different states, to get a state law claim before a federal court, according to Anthony Casey, assistant professor of law at the University of Chicago. For state claims, there is no jurisdiction requirement. But shareholders who received less than $75,000—or those who have not received a summons—should not take solace in not being served, he added.

Both state and federal lawsuits are pending.

“The lawsuits seek to treat the defendants as a class,” Casey said. “They are claiming that it would be impracticable to serve and sue all defendants, so they should be able to serve and sue the class representatives.”

As for Lies, all that remains is a series of questions.  

“How does this thing come to an end?” he asked. “How long does it take, and how much money do you have to spend, and how long do you play the game so that nothing bad happens?”


Adding another layer to the Tribune bankruptcy case, billionaire Sam Zell announced he is suing former shareholders, and should be credited along with shareholders, if courts rule in their favor. Anthony Casey, assistant professor of law from the University of Chicago, joins us on Chicago Tonight at 7:00 pm to discuss whether taking money back from former shareholders -- otherwise known as clawbacks -- is a possibility. See Mark Lies' letter below, as well as state law complaints to recover proceeds from Tribune leveraged buyout.

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