LexisNexis® Legal Newsroom
    Federal Judge Finds Nondischargeability Issue Can Be Heard In State Court

    INDIANAPOLIS - A federal bankruptcy judge on Aug. 16 refused to stay a state court action filed by the purchasers of a home who sought compensation from the bankrupt sellers of the property for mold remediation, finding that the issue of nondischargeability did not have to be heard in a bankruptcy court (In re: Aaron Muir and Stephanie Muir, No. 12-4065, Aaron Muir, et al. v. Matthew McWilliams, et al., Adv. No. 13-50136, S.D. Ind. Bky.; 2013 Bankr. LEXIS 3347).

    Unions: Detroit's Bankruptcy Unconstitutional, Violates Federalism, State Law

    DETROIT - A group of unions on Aug. 19 filed an objection to the Chapter 9 bankruptcy filing of the City of Detroit, contending that the city is not eligible to file for bankruptcy and that the petition itself was unconstitutional (In Re: City of Detroit, No. 13-53846, Chapter 9, E.D. Mich. Bkcy.).

    Attorney: MF Global, JPMorgan Deal Should Be Approved To Resolve All Claims

    NEW YORK - An attorney representing bankrupt MF Global Holdings Ltd. (MFGH) on Aug. 16 filed a declaration supporting the plan administrator's motion seeking approval of a settlement between the plan administrator and JPMorgan Chase Bank NA to resolve rival claims between the bank and MFGH (In Re: MF Global Holdings Ltd., No. 11-15059, Chapter 11, S.D. N.Y. Bkcy.).

    Detroit Retirement Systems: $300M In Casino Revenue Claims Should Be Denied

    DETROIT - The Police and Fire Retirement System of the City of Detroit (PFRS) and the General Retirement System of the City of Detroit (GRS) on Aug. 16 filed a brief opposing the termination of a forbearance agreement between the city and what are called Swap Counterparties under which the city would agree to the full amount of the Swap Counterparties' $300 million in claims against the bankruptcy estate (In Re: The City of Detroit, No. 13-53846, Chapter 9, E.D. Mich. Bkcy.).

    U.S. Trustee Opposes Bonuses For AgFeed Employees On Grounds They Are Retentive

    WILMINGTON, Del. - The U.S. trustee in the Chapter 11 bankruptcy of AgFeed USA LLC on Aug. 16 filed a brief objecting to the debtor's motion to honor certain employee incentive programs on grounds that they are retentive as opposed to being "primarily incentivizing" (In Re: AgFeed USA LLC, No. 13-11761, Chapter 11, D. Del. Bkcy.).

    3rd Circuit: Loan Transaction Not Fraudulent, Trustee May Not Recover Transfer

    PHILADELPHIA - A panel of the Third Circuit U.S. Court of Appeals on Aug. 16 affirmed dismissal of a trustee's complaint that alleged that a loan transaction constituted a fraudulent transfer because insider transactions such as the one at issue are not per se fraudulent (Jonathan Kohn v. McGuire Woods, No. 12-3028, Chapter 11, 3rd Cir.; 2013 U.S. App. LEXIS).

    NECP MDL Judge Approves Voluntary Mediation Program For Third Parties, Nondebtors

    BOSTON - A Massachusetts federal judge on Aug. 15 approved a voluntary mediation program for claims by nondebtors and third parties against New England Compounding Pharmacy Inc. (NECP), the bankrupt defendant at the center of a deadly contaminated drug outbreak (In Re: New England Compounding Pharmacy, Inc., Products Liability Litigation, MDL Docket No. 2419, No. 1:13-md-2419, D. Mass.).

    PNC Bank Objects To Deal That Would Limit ResCap's Mortgage Liability To $57.6M

    NEW YORK - PNC Bank NA on Aug. 14 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York objecting to bankrupt Residential Capital LLC's (ResCap) motion seeking approval of a settlement agreement between a putative class of lenders and ResCap that would limit ResCap's liability to $57.6 million (In Re: Residential Capital LLC, No. 12-12020, Chapter 11, S.D. N.Y. Bkcy.).

    9th Circuit: Debtor's Actions 'Egregious'; Dismissal Proper For Abuse Of Process

    SAN FRANCISCO - A panel of the Ninth Circuit U.S. Court of Appeals on Aug. 15 affirmed a bankruptcy court's ruling that a Chapter 13 debtor's case was dismissed because she abused the process by repeatedly filing petitions and not completing the plans and used the bankruptcy process in an attempt to foil the foreclosure on her property (In Re: Bernice Carol Glover, No. 11-60033, Chapter 13, 9th Cir.; 2013 U.S. App. LEXIS 16950).

    CFTC: U.S. Bank Is Liable For Fraud That Led To Peregrine Financial Bankruptcy

    CEDAR RAPIDS, Iowa - The U.S. Commodity Futures Trading Commission (CFTC) on Aug. 15 filed a brief in the U.S. District Court for the Northern District of Iowa contending that U.S. Bank National Association is directly liable for the Ponzi scheme operated by Russell Wasendorf Sr., the former chief executive officer of bankrupt Peregrine Financial Group Inc. (CFTC v. U.S. Bank NA, No. 13-02041, Chapter 7, N.D. Iowa).

    'Girls Gone Wild' Creditor: Wynn Settlement Will 'Massively Dilute' Her Award

    LOS ANGELES - A creditor in the Chapter 11 bankruptcy of GGW Brands LLC, the parent company of a group of entities that produce adult videos carrying the name "Girls Gone Wild," on Aug. 15 filed a brief and a statement of issues on appeal, contending that the bankruptcy court erred when it approved GGW's more than $26.64 million settlement with the casino Wynn Las Vegas LLC and its operator Stephen A. Wynn (collectively, the Wynn entities) (In Re: GGW Brands LLC, No. 13-15130, Chapter 11, C.D. Calif. Bkcy.).

    11th Circuit Reverses; Tax Refunds Not Part Of Bankruptcy Estate

    ATLANTA - A panel of the 11th Circuit U.S. Court of Appeals on Aug. 15 reversed a bankruptcy court's ruling that more than $48.11 million in tax refunds were part of the bankruptcy estate for a bank that had become insolvent and held that the money had to be turned over to the Federal Deposit Insurance Corp. for distribution to the debtor's subsidiary corporations (Clifford A. Zucker v. FDIC $(In Re: BankUnited Financial Corporation$), No. 12-11392, Chapter 11, 11th Cir.; 2013 U.S. App. LEXIS 16896).

    3rd Circuit: Workers Entitled To More Than $14.76M From Railroad Merger Agreement

    PHILADELPHIA - A panel of the Third Circuit U.S. Court of Appeals on Aug. 14 affirmed an award of $14,761,238 to a group of former railroad employees who said they were owed benefits as a result of an agreement that they entered with the Pennsylvania Railroad Co. prior to the merger that created the Penn Central Transportation Co. (PCTC) (In The Matter of: Penn Central Transportation Company, No. 12-3807, Chapter 11, 3rd Cir.).

    Kodak Creditor Says Its Claim Of More Than $250.61M Stands

    NEW YORK - STWB Inc., a creditor in the Chapter 11 bankruptcy of Eastman Kodak Co., on Aug. 14 filed a brief arguing that bankruptcy court's decision to allow STWB's claim against Kodak's estate of $125 million for the purposes of voting on the plan of reorganization is not an actual estimation of the claim's value, which STWB says is greater than $250.61 million (In Re: Eastman Kodak Company, No. 12-10202, Chapter 11, S.D. N.Y. Bkcy.).

    5th Circuit Rules Debtor's Appeal 'Frivolous,' Says Case Lacked Merit

    NEW ORLEANS - A panel of the Fifth Circuit U.S. Court of Appeals on Aug. 13 dismissed a debtor's appeal as "frivolous" on grounds that her case lacked merit because it was filed in an attempt to avoid foreclosure on her home (Audrey Coleman v. Roy Williams Jr., No. 13-10165, Chapter 13, 5th Cir.; 2013 U.S. App. LEXIS 16763).

    U.S. Trustee: Kodak's Plan Of Reorganization Does Not Meet Statutory Requirements

    NEW YORK - The U.S. trustee in the Chapter 11 bankruptcy of the Eastman Kodak Co. on Aug. 13 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York objecting to confirmation of the company's Chapter 11 plan on grounds that Kodak has failed to show that the plan meets the statutory requirements of 11 U.S. Code Section 1129 (In Re: Eastman Kodak Company, No. 12-10202, Chapter 11, S.D. N.Y. Bkcy.).

    3rd Circuit: Family's Claim Against Debtor Company Preempted By Federal Law

    PHILADELPHIA - A panel of the Third Circuit U.S. Court of Appeals on Aug. 13 reversed and remanded a bankruptcy court's ruling and held that a family that sued a debtor company for wrongful death was not entitled to file a claim in the bankruptcy proceeding because it was preempted by the Hazardous Materials Transportation Act (HMTA), 49 U.S. Code Section 5101 (Kenneth Elder Sr. v. Amtrol Holdings Inc. $(In Re: Amtrol Holdings Inc.$), No. 10-3273, 3rd Cir.; 2013 U.S. App. LEXIS 16703).

    Detroit Bankruptcy Judge Appoints Mediator For 'Facilitative Mediation'

    DETROIT - The federal bankruptcy judge presiding over the Chapter 9 bankruptcy of the City of Detroit on Aug. 13 issued an order appointing a mediator for various issues that require "facilitative mediation" (In Re: City of Detroit, No. 13-53846, Chapter 9, E.D. Mich. Bkcy.).

    U.S. Government, 6 States Seek Injunction Blocking Merger Of American, US Airways

    WASHINGTON, D.C. - The U.S. Department of Justice on Aug. 13 filed a lawsuit against US Airways Group Inc. and AMR Corp., the parent company of American Airlines Inc., seeking a full injunction to prevent the proposed merger of the two airlines on grounds that it violates federal antitrust law and that "consumers will get the shaft" (United States of America, et al. v. US Airways Group, et al., No. 13-01236, D. D.C.).

    Federal Judge: Debtor's Loan Appeal Lacks Merit; Right To Trial Still Stands

    PHILADELPHIA - A federal judge in Pennsylvania on Aug. 7 ruled that a debtor's appeal regarding the dischargeability of his medical student loans lacked merit and said that nothing deprived him of a right to a jury trial (D. Erik Von Kiel v. Department of Health and Human Services $(In Re: D. Erik Von Kiel$), No. 12-4345, Chapter 7, E.D. Pa.).

    Bankruptcy Judge: Resort's Claims Against 'Girls Gone Wild' Just More Than $26.64M

    LOS ANGELES - The federal bankruptcy judge presiding over the Chapter 11 bankruptcy of GGW Brands LLC, the parent company of the company that produces the "Girls Gone Wild" series of adult videos, on Aug. 9 approved a settlement between GGW and the Las Vegas resort Wynn Las Vegas LLC in which the resort will be allowed to file claims against the bankruptcy estate for more than $26.64 million (In Re: GGW Brands LLC, No. 1301513, Chapter 11, C.D. Calif. Bkcy.).

    Dewey & LeBoeuf Trustee Seeks More Than $4.81M In Fraudulent Transfers

    NEW YORK - The liquidating trustee in the Chapter 11 bankruptcy proceeding of former law firm Dewey & LeBoeuf on Aug. 9 filed 12 adversary actions in the U.S. Bankruptcy Court for the Southern District of New York seeking to recover a total of $4,815,806.66 in what the trustee says are fraudulent transfers. The complaints all follow the same boilerplate (In Re: Dewey & LeBoeuf, No. 12-12321, Chapter 11, S.D. N.Y. Bkcy.).

    3rd Circuit: Debtor's Case Against Trustee 'Frivolous'; Sanctions Award Upheld

    PHILADELPHIA - A panel of the Third Circuit U.S. Court of Appeals on Aug. 8 affirmed a bankruptcy court's award of sanctions to a trustee and dismissed a debtor's lawsuit against him on the ground that it was frivolous (In Re: Syed M. Hussain, No. 13-1278, Chapter 7, 3rd Cir.; 2013 U.S. App. LEXIS 16412).

    7th Circuit: $34M Claim By Bank Of America Against Debtor Company Denied

    CHICAGO - A panel of the Seventh Circuit U.S. Court of Appeals on Aug. 8 affirmed a district court's ruling that dismissed Bank of America's $34 million complaint against a debtor company on grounds its complaint lacked specific allegations (Bank of America v. James A. Knight, No. 12-2698, Chapter 13, 7th Cir.; 2013 U.S. App. LEXIS 16474).

    3rd Circuit: Lender Entitled To $10M Belonging To Debtor's Subsidiary

    PHILADELPHIA - A panel of the Third Circuit U.S. Court of Appeals on Aug. 8 affirmed a bankruptcy court and ruled that a lender was entitled to recover a bank account worth $10 million that belonged to the wholly owned subsidiary of the debtor corporation (Wachovia Bank National Association v. WL Homes LLC $(In Re: WL Homes LLC$), No. 12-3414, Chapter 7, 3rd Cir.; 2013 U.S. App. LEXIS 16440).