EGI-TRB, Zell blast lawsuit provisions in Tribune competing plans

By Caroline Salls

Pittsburgh, Feb. 15 - EGI-TRB LLC and its president and former Tribune Co. board member Samuel Zell objected to confirmation of the two competing plans filed in Tribune's bankruptcy case, arguing that both plans assign lawsuits to a litigation trust regardless of whether the suits have merits or are in creditors' best interests.

"This misuse of estate funds to pursue meritless lottery-ticket litigation is improper and should prevent confirmation," EGI-TRB said in its objection filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

In addition, EGI-TRB said the plans attempt to strip potential defendants of statutory safe-harbor defenses and keep them from asserting their own rights of indemnification, contribution and affirmative claims against third parties.

"In short, the plans seek to launch unfounded litigation and to prevent the fair defense of those claims," EGI-TRB said in the objection.

EGI-TRB said the parties most unfairly prejudiced and left subject to baseless claims under the proposed plans would be EGI-TRB and Zell.

In his objection, Zell said the plans are not fair to junior claim holders who would be forced to "bear the burden of the plan proponents' insistence on bringing claims that the court-appointed examiner already has found unlikely to succeed."

Zell also said the plan provisions are not fair because they could potentially dilute distributions to junior creditors.

Tribune, a Chicago-based media company, filed for bankruptcy on Dec. 8, 2008. Its Chapter 11 case number is 08-13141.

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