LexisNexis® Legal Newsroom
    Corzine, MF Global Executives: Trustee Fails To State Claim; Bad Faith Not Shown

    NEW YORK - Jon S. Corzine, former CEO of bankrupt MF Global Holdings (MFGH) Ltd., and his co-defendants on July 22 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York arguing that the lawsuit filed against them by the trustee should be dismissed because the complaint fails to state a claim (Louis J. Freeh v. Jon S. Corzine, et al. $(In Re: MF Global Holdings Ltd., Adv. No. 13-01333, No. 11-15059, Chapter 11, S.D. N.Y. Bkcy.).

    Garlock Loses Bid To Unseal Evidence Of Trust Claims, Asbestos Exposures

    CHARLOTTE, N.C. - A North Carolina federal bankruptcy judge on July 23 denied a request by Chapter 11 debtor Garlock Sealing Technologies LLC to make public evidentiary documents that were filed under seal for Garlock's asbestos liability estimation trial, including evidence that Garlock says shows that some claimants lied about their exposures to asbestos products to boost their judgments or settlements against Garlock in the tort system (In re: Garlock Sealing Technologies, LLC, No. 10-31607, W.D. N.C. Bkcy.).

    Revstone Affiliate Metavation Seeks OK To Sell Assets For More Than $25 Million

    WILMINGTON, Del. - Metavation LLC, an affiliate of bankrupt Revstone Industries LLC, on July 23 moved in the U.S. Bankruptcy Court for the District of Delaware for approval to enter into an asset purchase agreement in which it would sell substantially all of its assets for more than $25 million (In Re: Metavation LLC, No. 13-11831, Chapter 11, D. Del. Bkcy.).

    Bankrupt MSR Hotels Seeks OK For Deal On Allocation Of Trademark Sale Proceeds

    NEW YORK - Bankrupt Real Estate Investment Trust (REIT) MSR Hotels & Resorts Inc. on July 22 moved for bankruptcy court approval of a stipulation between itself and two other parties pertaining to the allocation of proceeds from the sale of intellectual property assets (In Re: MSR Hotels & Resorts Inc., No. 13-11512, Chapter 11, S.D. N.Y. Bkcy.).

    Retirement Plans: Detroit's Bankruptcy Not Valid; Stay Extension Inapplicable

    DETROIT - Two groups representing the retirement plans for employees of the bankrupt City of Detroit on July 23 filed a brief arguing that the Michigan governor's authorization of the bankruptcy should be treated as if it never occurred (In Re: City of Detroit, No. 13-53846, Chapter 9, E.D. Mich. Bkcy.).

    AMR Committee: $424M In Tax Claims Should Be Disallowed, Expunged

    NEW YORK - The Official Committee of Unsecured Creditors in the Chapter 11 bankruptcy case of AMR Corp., the parent company of American Airlines Inc., on July 22 filed a brief objecting to the proof of claim submitted by some aircraft finance parties on account of tax indemnity agreements (TIA claims) that are valued at $424 million, arguing that the claims should be disallowed (In Re: AMR Corp., No. 11-15463, Chapter 11, S.D. N.Y. Bkcy.).

    Union: Detroit's Desire To Extend Automatic Stay Is 'Improper, Unprecedented'

    DETROIT - Unions opposing the Chapter 9 bankruptcy filing of the City of Detroit on July 22 filed a brief in the U.S. Bankruptcy Court for the Eastern District of Michigan objecting to the city's motion seeking application of the automatic stay to prevent lawsuits against the city while its bankruptcy proceeds (In Re: City of Detroit, No. 13-53846, Chapter 9, E.D. Mich. Bkcy.).

    Tribune: Los Angeles County Agency May Not Collect Pre-Petition Taxes

    WILMINGTON, Del. - The reorganized version of Tribune Co. on July 19 filed a brief objecting to a motion filed by the Los Angeles County Treasurer and Tax Collector (LATTC) which sought relief from the permanent injunction contained in the debtor's reorganization plan, arguing that collection was barred by the bankruptcy court's discharge injunction (In Re: Tribune Company, No. 08-13141, Chapter 11, D. Del. Bkcy.).

    Lightsquared Creditor: Sale Or Restructuring Of Company Should Be Ordered

    NEW YORK - Creditor SP Special Opportunities LLC (SPSO) filed a brief on July 23 in the Chapter 11 bankruptcy of Lightsquared Inc. in which it joined the Ad Hoc Group of Lightsquared Lenders in objecting to the debtor's motion seeking to extend the exclusivity period related to filing a Chapter 11 plan of reorganization. SPSO contends that the bankruptcy court should order an expeditious sale or restructuring of the company (In Re: Lightsquared Inc., No. 12-12080, Chapter 11, S.D. N.Y. Bkcy.).

    Bankruptcy Judge Give Hostess Right To Refuse Bids For Assets If Less Than $40M

    NEW YORK - The federal bankruptcy judge in New York presiding over the Chapter 11 proceeding of Old HB Inc., formerly known as Hostess Brands Inc., on July 19 granted the company approval to proceed with an auction of its remaining assets in which the company will have the right to determine that no bid is qualified if it is for less than $40 million (In Re: Old HB Inc. f/k/a Hostess Brands Inc., No. 12-22052, Chapter 11, S.D. N.Y. Bkcy.).

    2nd Circuit Reverses, Remands; Bankrupt Worldcom Must Pay Taxes, IRS Claim

    NEW YORK - A panel of the Second Circuit U.S. Court of Appeals on July 22 reversed and remanded a case in which a bankruptcy court had granted bankrupt Worldcom Inc.'s objection to a claim filed by the Internal Revenue Service and had said that the IRS should refund Worldcom the amount it paid in excise taxes (Internal Revenue Service v. Worldcom Inc. $(In Re: Worldcom Inc.$), No. 12-803, 2nd Cir.; 2013 U.S. App. LEXIS 14763).

    Bankruptcy Judge Expedites Detroit Proceeding, Says He Alone Has Jurisdiction

    DETROIT - The federal bankruptcy judge presiding over the Chapter 9 case of the City of Detroit on July 22 granted the city's motion for an expedited hearing and said that he has jurisdiction over the bankruptcy case despite objections from pension funds that sought to delay the bankruptcy proceeding (In Re: City of Detroit, No. 13-53846, Chapter 9, E.D. Mich. Bkcy.).

    Kodak Bankruptcy Judge Values $250M Claim At $125M For For Plan Voting Purposes

    NEW YORK - The federal bankruptcy judge presiding over the Chapter 11 proceeding of Eastman Kodak Co. on July 19 ordered that the claims of a creditor who sought $250 million would be reduced to $125 million solely for the purposes of voting on an amended plan of reorganization (In Re: Eastman Kodak Company, No. 12-10202, Chapter 11, S.D. N.Y. Bkcy.).

    Insurers: Conversion Of Power Company Case To Chapter 7 'Entirely Unnecessary'

    GREAT FALLS, Mont. - A group of insurance companies who are creditors in the Chapter 11 bankruptcy of the Southern Montana Electric Generation and Transmission Cooperative Southern Montana on July 18 filed a brief arguing that the motion of the Unsecured Creditors Committee to convert the bankruptcy to a Chapter 7 liquidation is "entirely unnecessary" (In Re: Southern Montana Electric Generation and Transmission Cooperative, No. 11-62031, Chapter 11, D. Mont.).

    Detroit: Cases Against City Should Be Stayed As It Proceeds With Bankruptcy

    DETROIT - The City of Detroit, the largest municipality to file for Chapter 9 bankruptcy, on July 19 moved in bankruptcy court for application of the automatic stay to state entities, non-officer employees and agents and representatives of the city (In Re: City of Detroit, No. 13-53846, Chapter 9, E.D. Mich. Bkcy.).

    8th Circuit: Sanctions Proper For Company President Who Violated Court's Orders

    ST. LOUIS - A panel of the Eighth Circuit U.S. Court of Appeals on July 19 affirmed a district court's ruling that held that sanctions were appropriate against the president of a company that filed for Chapter 11 bankruptcy because she had been warned not to file briefs containing unsubstantiated allegations and did so anyway (Naomi Isaacson v. Nauni Jo Manty, No. 12-2384, Chapter 7, 8th Cir.; 2013 U.S. App. LEXIS 14629).

    Bankrupt Reader's Digest Seeks Disallowance Of Employee Indemnification Claims

    NEW YORK - RDA Holding Co., the parent company for publisher Reader's Digest, on July 17 filed a brief in bankruptcy court objecting to employee indemnification claims on grounds that they should be expunged until there is an effective date when the reorganization plan will be implemented (In Re: RDA Holding Co., No. 13-22233, Chapter 11, S.D. N.Y. Bkcy.).

    Arcapita Seeks Approval Of $365M Sale Of Nondebtor Subsidiary To Logistics Firm

    NEW YORK - Bankrupt Arcapita Bank B.S.C. on July 18 moved for bankruptcy court approval of its request to sell its nondebtor subsidiary 3PD Inc. to a logistics company for $365 million (In Re: Arcapita Bank B.S.C., No. 12-11076, Chapter 11, S.D. N.Y. Bkcy.).

    Detroit Files For Chapter 9 Bankruptcy; Cash Flow At Negative $198.5M

    DETROIT - The City of Detroit on July 18 filed for Chapter 9 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Michigan as its emergency manager declared that the city is insolvent and that, absent restructuring, he projects cash flows of negative $198.5 million in the current fiscal year, with that number likely to jump to negative $260.4 million in fiscal year 2015 (In Re: City of Detroit, No. 13-53846, Chapter 9, E.D. Mich. Bkcy.).

    AMR Creditor: Motion Seeking Maximum Limit On Disputed Claims Should Be Denied

    NEW YORK - A creditor in the Chapter 11 bankruptcy of AMR Corp., the parent company of American Airlines Inc., on July 17 filed a brief in bankruptcy court arguing that the bankruptcy court should deny the company's motion to set a maximum limit on the amount to be paid on disputed claims (In Re: AMR Corporation, No. 11-15463, Chapter 11, S.D. N.Y. Bkcy.).

    10th Circuit: Trustee May Sue Canadians For Breaches Resulting In Bankruptcy

    DENVER - A panel of the 10th Circuit U.S. Court of Appeals on July 17 partially reversed a ruling and held that a liquidating trustee had jurisdiction to sue the directors and officers of a Canadian company whose U.S. affiliate filed for bankruptcy on grounds that the officers did enough business in the United States for them to be sued in federal district court (P. David Newsome Jr. v. William Gallacher, et al., No. 12-5068, Chapter 11, 10th Cir.; 2013 U.S. App. LEXIS 14415).

    4th Circuit Upholds Ruling Barring Co-Defendant's Testimony As A Sanction

    RICHMOND, Va. - A Fourth Circuit U.S. Court of Appeals panel on July 17 upheld a ruling barring a co-defendant in an adversary proceeding to a bankruptcy case from testifying as a sanction for numerous discovery violations after finding that the decision was not prejudicial to the challenging defendant (Southern Management Corporation Retirement Trust v. Charles Timothy Jewell, et al., No. 12-2319, 4th Cir.; 2012 U.S. App. LEXIS 14434).

    Lukoil To Pay $93M To Getty To Settle Claims Of Alleged Fraudulent Transfers

    NEW YORK - The liquidating trustee for the Chapter 11 bankruptcy of Getty Petroleum Marketing Inc.(GPMI) on July 17 moved in bankruptcy court for approval of a deal in which Lukoil Americas Corp. would pay $93 million to GPMI to settle claims related to allegedly fraudulent transfers before GPMI filed for bankruptcy (Getty Petroleum Marketing Inc. v. Lukoil Americas Corporation, et al. $(In Re: Getty Petroleum Marketing Inc.$), Adv. No. 11-02942, No. 11-15606, Chapter 11, S.D. N.Y. Bkcy.).

    Bankrupt 'Girls Gone Wild,' Las Vegas Casino Reach Deal On $31M In Claims

    LOS ANGELES - The trustee of Bankrupt GGW Brands LLC, the producer of adult videos carrying the name "Girls Gone Wild," on July 15 moved for bankruptcy court approval of a stipulated agreement that would resolve a $31 million claim against the GGW bankruptcy estate made by Wynn Las Vegas LLC and its principal, Stephen A. Wynn (In Re: GGW Brands LLC, No. 13-15130, Chapter 11, C.D. Calif. Bkcy.).

    Dewey & LeBoeuf Creditors Say $15M Claim Should Be Allowed Even Though It's Late

    NEW YORK - Creditors of bankrupt law firm Dewey & LeBoeuf on July 16 filed a brief arguing that the bankruptcy court should permit them to file a late claim for $15 million as a result of alleged malpractice by one of the firm's attorneys (In Re: Dewey & LeBoeuf, No. 12-12321, Chapter 11, S.D. N.Y. Bkcy.).