When an $8-billion company goes bankrupt, it's tempting to find someone to blame -- and all the more so when that company is headed by someone as rude, crass and personally unappealing as Sam Zell. Now the foundering media conglomerate's bondholders are targeting Zell, along with the investment banks that enabled his massively leveraged buyout of Tribune, accusing them of committing a form of fraud. But do they have the wrong scapegoats?

The bondholders, whose identities are not public, have reportedly asked the judge overseeing Tribune's bankruptcy to either let them investigate the circumstances surrounding Zell's takeover or assign an independent investigator to do the same.
They claim that J.P. Morgan and the other banks that backed the deal committed "fraudulent conveyance" by engineering an acquisition that saddled Tribune with so much debt, it could only result in bankruptcy -- allowing the banks to convert their bad loans into equity. A call to J.P. Morgan Chase was not immediately returned.

But it's not fair to lay all the blame on the banks. After all, to go forward, the deal involving the newspaper and television company required two opinions from an independent assessor stating that it would be able to handle the debt it was taking on. The solvency opinions came from a company called Valuation Research Corporation. Tribune's management has pointed to the opinions in the past in defending itself against negative press coverage.

How did VRC get the call so very wrong? I called co-CEO William Hughes to ask him about it, but he only told me, "I'm restricted from commenting."

As for Zell, there's no question that he structured the deal in such as a way as to risk practically none of his own money while jeopardizing the retirement accounts of Tribune employees. But there was no conspiracy there; everyone knew it at the time. Surely he deserves a great portion of the blame for Tribune's current predicament. But to claim that he could have or should have known it would turn out this way credits him with a foresight and understanding of the publishing business he's never shown any sign of possessing.

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