LexisNexis® Legal Newsroom
    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.).

    Exide Committee: DIP Loan Is 'Extremely Prejudicial' To Unsecured Creditors

    WILMINGTON, Del. - The Official Committee of Unsecured Creditors in the Chapter 11 bankruptcy of Exide Technologies on July 16 filed a brief objecting to the company's request for bankruptcy court approval of $500 million in post-petition financing, also known as debtor-in-possession (DIP) financing, on grounds that the case control milestones encompassed in the loan are "extremely prejudicial" (In Re: Exide Technologies, No. 13-11482, Chapter 11, D. Del. Bkcy.).

    5th Circuit Reverses Ruling; Debtor Has Valid Claim For Promissory Estoppel

    NEW ORLEANS - A panel of the Fifth Circuit U.S. Court of Appeals on July 15 partially reversed and partially affirmed a district court decision, ruling that a debtor who was foreclosed upon by her lender had stated a plausible claim for promissory estoppel even though she did not state a claim for declaratory relief on the basis of waiver (Gloria Martin-Janson v. JPMorgan Chase Bank, No. 12-50380, Chapter 13, 5th Cir.; 2013 U.S. App. LEXIS 14284).

    2nd Circuit Reverses; Evidence Needed On Automatic Stay Issue In ResCap Bankruptcy

    NEW YORK - A panel of the Second Circuit U.S. Court of Appeals on July 15 reversed a District Court ruling and held that more evidence was needed to determine whether the automatic stay applied in a case where the Federal Housing Finance Agency (FHFA) sued the parent and affiliates of Bankrupt Residential Capital (ResCap) related to home loans (Residential Capital v. Federal Housing Finance Agency $(In Re: Residential Capital LLC$), No. 12-3342, Chapter 11, 2nd Cir.).

    8th Circuit: Debtors May Not Claim Exemption For Claim Related To Personal Injury

    ST. LOUIS - A panel of the Eighth Circuit U.S. Court of Appeals on July 12 affirmed a bankruptcy court's decision and said that based on precedent, a debtor couple could not claim an exemption for an unliquidated personal injury claim (Abdullah Abdul Rahim, et al. v. John V. LaBarge Jr. $(In Re: Abdullah Abdul Rahim, et al.$), No. 12-3448, Chapter 13, 8th Cir.; 2013 U.S. App. LEXIS 14103).

    U.S. Trustee: OnCure's More Than $425,000 Retainer Does Not Meet Criteria

    WILMINGTON, Del. - The U.S. trustee in the Chapter 11 bankruptcy case of OnCure Holdings Inc. on July 12 filed a brief in the U.S. Bankruptcy Court for the District of Delaware objecting to the more than $425,000 retainer the company proposes to pay its bankruptcy counsel, on grounds that it does not meet the criteria for what is called an evergreen retainer (In Re: OnCure Holdings Inc., No. 13-11540, Chapter 11, D. Del. Bkcy.).

    ResCap Seeks OK To Make $230M Payment To End Federal Reserve Foreclosure Review

    NEW YORK - Bankrupt Residential Capital LLC (ResCap) on July 12 moved for authorization to enter into a consent agreement with the Federal Reserve Board (FRB) and the Federal Deposit Insurance Corp. under which it would pay $230 million to satisfy its payments under the FRB foreclosure review and end the review process (In Re: Residential Capital LLC, No. 12-12020, Chapter 11, S.D. N.Y. Bkcy.).

    National Envelope Proposes Plan For $67.5 Million In DIP Financing

    WILMINGTON, Del. - Bankrupt NE Opco Inc., formerly National Envelope Inc., on July 12 moved in the U.S. Bankruptcy Court for the District of Delaware for approval of an agreement with creditors and lenders that would pave the way for $67.5 million in post-petition financing, also called debtor-in-possession (DIP) financing (In Re: NE Opco Inc., No. 13-11483, Chapter 11, D. Del. Bkcy.).

    4th Circuit: Fraud Ruling, Sanctions Proper For Debtor's Discovery Abuses

    RICHMOND, Va. - A panel of the Fourth Circuit U.S. Court of Appeals on July 10 ruled that a debtor's repeated violations of discovery orders warranted a decision by a bankruptcy court that denied him the right to present evidence at trial, resulting in his conviction for fraud (Southern Management Corporation Retirement Trust v. Robert Fulton Rood IV, No. 12-2359, Chapter 7, 4th Cir.; 2013 U.S. App. LEXIS 13946).

    Bankrupt Video Game Maker THQ Says Liquidation Plan Complies With Bankruptcy Code

    WILMINGTON, Del. - Bankrupt video game maker THQ Inc. filed a brief on July 11 arguing that the U.S. Bankruptcy Court for the District of Delaware should approve its plan of liquidation on grounds that it complies with all the provisions of the Bankruptcy Code (In Re: THQ Inc., No. 12-13398, Chapter 11, D. Del. Bkcy.).

    San Bernardino Creditors: City Is Eligible For Chapter 9 Bankruptcy

    RIVERSIDE, Calif. - A group of creditors in the Chapter 9 bankruptcy of the City of San Bernardino, Calif., filed a brief joining the city's brief arguing that the bankruptcy court should grant summary judgment and rule that it is eligible to be a debtor (In Re: City of San Bernardino, Calif., No. 12-28006, Chapter 9, C.D. Calif. Bkcy.).

    Rothstein Trustee: Objections To Liquidation Plan Should Be Dismissed

    FORT LAUDERDALE, Fla. - The Chapter 11 trustee in the bankruptcy of former law firm Rothstein Rosenfeldt Adler (RRA) on July 10 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York contending that the U.S. trustee's objections to confirmation of the plan of liquidation should be dismissed (In Re: Rothstein Rosenfeldt Adler, No. 09-34791, Chapter 11, S.D. N.Y. Bkcy.).

    11th Circuit: Debtor's Damages Not Caused By Attorney Wrongdoing

    ATLANTA - A panel of the 11th Circuit U.S. Court of Appeals on July 10 affirmed a ruling that a debtor's damages could not be blamed on wrongdoing by his attorneys (Sohail M. Abdulla v. Scott J. Klosinski, No. 12-15448, Chapter 7, 11th Cir.; 2013 U.S. App. LEXIS 13960).

    Creditor With More Than $250M In Claims Objects To Kodak's Plan To Offer Only $1

    NEW YORK - Creditor STWB Inc. on July 10 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York, arguing that bankrupt Eastman Kodak Co. should not be permitted to estimate the amount of certain claims in its Chapter 11 case because doing so would "effectively disenfranchise" STWB of valuable property rights, which are part of its general unsecured claims exceeding $250 million (In Re: Eastman Kodak Company, No. 12-10202, Chapter 11, S.D. N.Y. Bkcy.).

    Bankrupt MSR Says Five Mile Capital Lacks Standing To Convert Case To Chapter 7

    NEW YORK - Bankrupt MSR Hotels & Resorts Inc. on July 10 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York arguing that Five Mile Capital Partners LLC, which seeks to convert the Chapter 11 bankruptcy to Chapter 7, lacks standing (In Re: MSR Hotels & Resorts Inc., No. 13-11512, Chapter 11, S.D. N.Y. Bkcy.).