The Official Committee of Unsecured Creditors is seeking to claw back cash awards given to about 200 former and current employees, who were given between $10,000 and several million dollars when the company went private in 2007, the Chicago Tribune reported Saturday.
The highly leveraged company collapsed within a year after going private. The creditors are legally allowed to chase the funds that were paid out the same year the company filed for bankruptcy, the newspaper said.
Some of the employees were just going about their daily business and were paid out on stock options they were holding when the company was taken private by Chicago businessman Sam Zell.
Owen Youngman, for example, was a Tribune employee for 37 years. When the company went private, he was given $328,049 out of stock options he had saved up over the years.
Others, such as former Chairman and Chief Executive Officer Dennis FitzSimons, were extensively involved in the deal that collapsed and walked away with tens of millions of dollars.
Nine executives were paid more than $5 million. Twelve were paid more than $1 million. The suit does not discriminate between middle management or top executives.
Some of those affected by the suit are "people who did absolutely nothing wrong," said Eddy Hartenstein, co-president of Tribune Co. and publisher of the Los Angeles Times.