The NYT’s Andrew Ross Sorkin has an excellent column today on Tribune. He slams a list of players, including the company’s board for knowingly putting the company—and especially its employees—at serious risk by selling to a man with no newspaper experience who planned to load it to the gills with debt, an utter fiasco:

With one of the grand old names of American journalism now confronting an uncertain future, it is worth remembering all the people who mismanaged the company before hand and helped orchestrate this ill-fated deal — and made a lot of money in the process. They include members of the Tribune board, the company’s management and the bankers who walked away with millions of dollars for financing and advising on a transaction that many of them knew, or should have known, could end in ruin.

It was Tribune’s board that sold the company to Mr. Zell — and allowed him to use the employee’s pension plan to do so. Despite early resistance, Dennis J. FitzSimons, then the company’s chief executive, backed the plan. He was paid about $17.7 million in severance and other payments. The sale also bought all the shares he owned — $23.8 million worth. The day he left, he said in a note to employees that “completing this ‘going private’ transaction is a great outcome for our shareholders, employees and customers.”

Well, at least for some of them.

Tribune’s board was advised by a group of bankers from Citigroup and Merrill Lynch, which walked off with $35.8 million and $37 million, respectively. But those banks played both sides of the deal: they also lent Mr. Zell the money to buy the company. For that, they shared an additional $47 million pot of fees with several other banks, according to Thomson Reuters. And then there was Morgan Stanley, which wrote a “fairness opinion” blessing the deal, for which it was paid a $7.5 million fee (plus an additional $2.5 million advisory fee).

On top of that, a firm called the Valuation Research Corporation wrote a “solvency opinion” suggesting that Tribune could meet its debt covenants. Thomson Reuters, which tracks fees, estimates V.R.C. was paid $1 million for that opinion. V.R.C. was so enamored with its role that it put out a press release.

And he’s right to point out that Zell had almost no skin in the game:

Granted, Mr. Zell, 67, put up some money. He invested $315 million in the form of subordinated debt in exchange for a warrant to buy 40 percent of Tribune in the future for $500 million. It is unclear how much he’ll lose, but one thing is clear: when creditors get in line, he gets to stand ahead of the employees.

The Tribune-owned LA Times explains what bankruptcy means for operating the business:

During a Chapter 11 bankruptcy reorganization, major management decisions must pass muster with a bankruptcy judge, and the ultimate fate of a company — including whether it remains intact or is sold off in pieces — could be decided in part by its creditors…

With Tribune now in bankruptcy protection, its creditors will have to decide whether they’re willing to restructure the debt, as Zell hopes, or try to get at least some of their money back another way, such as by a sale of its assets.

A breakup seems unlikely, however. Even if buyers were to emerge for some of the company’s media properties, financing such purchases could be a major stumbling block given that credit remains tight.

In many bankruptcies, creditors exchange debt for an ownership stake in the business, in the hope of eventually selling that stake at a profit. Barring a breakup of the company, the issue facing Tribune’s creditors could come down to how much of a debt load to leave on the company’s balance sheet and how much of an equity stake to demand.

This is good reporting by the LA Times here that others should have had. The key for the future of Tribune will be how much debt the reorganized company gets to offload:

The big losers in the Tribune bankruptcy may be banks and bond investors that funded Zell’s buyout.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.