A few months ago Michael Oneal wrote a piece that forecast that Sam Zell might lose control of the Tribune Co. Earlier this week the Chicago Sun-Times reiterated the piece. Now the New York Post has joined in too. All three of the newspaper articles are sourcing from an unknown person or persons, though the Sun-Times and the Post explain the interest of the anonymous party in the bankruptcy.

Editor & Publisher has a recap of the Post article. It includes the tidbit that the holders of subordinated debt are planning to petition the court to put their claims against the company before the claims of the creditors who bankrolled the original buyout. The Post notes that the employees will probably receive a small payout to terminate the ESOP. In other words, if you financially backed this process, you go to the end of the line to get paid. Also, employees will be given a small payout for the risk they took.

A few points about the Zell/Tribune fiasco.

First, there was no requirement that the company be sold. The big winner here is the Chandlers. Not only did they have the luck to sell the Times at the height of the media market to the Tribune Co., they then sold the Tribune Co. before media went into this incredible tailspin. But the company could have said no. They were a large shareholder, but not a majority shareholder.

Second, Ron Burkle and Eli Broad made a bid against Zell for the company. Their bid was reported to be worth the same amount, $34 a share, as Zell's. The deal was setup so that Zell would risk only $300 million as a creditor of the company. And, in addition, would have complete control of the assets of the true shareholders, the ESOP. The whole thing will be in litigation for a long time as his fiduciary responsibility to the ESOP is explored.

It may not look good now. The word “Grace Dancer” will have a new ring to it. And, with all the litigation that is likely, it may turn into a much worse situation for all the geniuses who planned and executed this thing.