Tribune Company Creditors Suspicious of Foundations’ Stock Sales
June 12, 2009 | Read Time: 1 minute
Suspicious creditors are questioning why two foundations associated with the beleaguered Tribune Company sold billions of dollars’ worth of Tribune stock about one year before the company filed for Chapter 11 bankruptcy, The Wall Street Journal reports.
The McCormick Tribune Foundation (whose endowment was valued at nearly $1-billion last year) sold $1.5-billion worth of company stock in the company’s 2007 leveraged buyout for a $963-million profit. Around the same time, the Cantigny Foundation, also associated with the company, sold almost $184-million worth of Tribune stock.
The leveraged buyout left the Tribune Company with billions in debt. Documents filed in court on Wednesday do not reveal why creditors are examining the deals, but parts of the bankruptcy code suggest that such stock sales could be problematic when the sellers make a profit on a company that is so close to collapse.
A McCormick Foundation lawyer declined to answer questions from creditors and did not respond to the newspaper’s inquiries.
