2nd Circ. Says Tribune Creditors Can't Touch Stock Payouts

By Jody Godoy (March 24, 2016, 6:31 PM EDT) -- The Second Circuit on Thursday said Tribune Co. creditors can't claw back $8.3 billion stockholders received in a leveraged buyout ahead of the company's bankruptcy, holding that the Bankruptcy Code prohibits such actions because they would saddle the market with uncertainty.

In a 53-page decision, the three-judge panel dismantled the argument by Tribune pension benefit recipients and noteholders who sued the former shareholders under state law for alleged overpayments on the publisher's stock ahead of its 2008 Chapter 11 filing. The suit is preempted because Congress meant for federal bankruptcy law to shield the market from the kind of pervasive uncertainty...

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