The motorcycle-riding billionaire, renowned for his deft touch with real estate and corporate turnarounds, took Tribune Co. private in late 2007 promising to energize the lumbering company. He piled on debt at exactly the wrong time, and a collapse in advertising for traditional media forced him to take the company to Chapter 11 bankruptcy.<!-- BlogBurst ContentStart -->
Eight months after the filing, two sources familiar with the process said creditors are working on a reorganization plan that elbows Zell aside. The creditors, including investment banks owed $8.6 billion from Zell's Tribune takeover, would stage a takeover of their own and sell off the company's newspapers and broadcast stations as they see fit.
"The banks will be in charge," one insider said, adding that they are growing impatient with Zell's stewardship. The bankruptcy court on Monday granted Zell extended time, until Nov. 30, to be the first to file a reorganization plan. Creditors have to wait at least that long before filing their own plan with the court.
They don't pull any punches.
"This was a textbook case of a leverage buyout gone bad," said Brandt, president of Development Specialists Inc. "These were imbeciles who had no idea what they were doing."
So, this shouldn't change anything, except, perhaps, people's perceptions of Sam Zell as some kind of financial mastermind. He took on too much debt and waited too long to sell assets.