One could be excused from thinking a few years ago that fraudulent transfer attacks on LBOs had all but gone the way of the dinosaur. The use of “solvency opinions” by reputable analysts to support the deal price and the strong incentive of the LBO buyer group to insure the solvency of the surviving entity would seem to protect deals from fraudulent transfers attacks when a company deal does fail after an LBO deal. Now we hear that such a claim has surfaced in the Tribune Company Chapter 11 proceeding. A special examiner’s report concludes that there is evidence for concluding that the second stage of the buyout is vulnerable to a fraudulent tranfer claim. The buyout itself was wacky. Sam Zell concocted an Employee Stock Ownership Plan buyer, threw in a bit of cash, and took a 15 year option on 40% of the company. The deal was a stretch from the start and the employees in the ESOP should have rejected it. In any event, if the claim prevails, the company in bankruptcy will clawback the cash paid to the previous owners, including Chandler family. The case signals a rebirth for the previously discredited fraudulent transfer allegation in LBOs.