LexisNexis® Legal Newsroom
    SEC Reaches Settlement With City Over Federal Securities Law Violations

    WASHINGTON, D.C. - The Securities and Exchange Commission and the City of Harrisburg, Pa., have agreed to a cease-and-desist order preventing the city from continuing its violation of federal securities laws in connection with statements it made both publicly and in financial documents regarding the city's failure to comply "with written undertakings executed by the City in the form of Continuing Disclosure Certificates," the SEC said in its order, filed on May 6 (In the Matter of the City of Harrisburg, Pennsylvania, No. 3-15316, SEC).

    Hostess Settles With 7 Unionized Pension Plans

    NEW YORK - The federal bankruptcy judge presiding over the Chapter 11 proceeding of Hostess Brands Inc. on May 6 approved a pension settlement plan among the bakery and seven unions (In Re: Old HB Inc. f/k/a Hostess Brands Inc., No. 12-22052, Chapter 11, S.D. N.Y. Bkcy.).

    ResCap Seeks Approval Of $800M Settlement With Junior Secured Noteholders

    NEW YORK - Bankrupt mortgage company Residential Capital LLC (ResCap) on May 7 moved for authorization of a plan to partially satisfy certain secured claims held by junior secured noteholders, under which it would pay $800 million to avoid potentially having to pay more to the noteholders if they were to prevail in an adversary proceeding (In Re: Residential Capital LLC, No. 12-12020, Chapter 11, S.D. N.Y. Bkcy.).

    Vacuum Maker Oreck Files For Chapter 11, Seeks $11M In Post-Petition Funding

    NASHVILLE, Tenn. - Vacuum cleaner company Oreck Corp. filed for Chapter 11 bankruptcy on May 6, citing assets and debts ranging from $10 million to $50 million, and immediately moved for approval of $11 million in post-petition financing, also called debtor-in-possession (DIP) financing (In Re: Oreck Corporation, No. 13-04006, Chapter 11, M.D. Tenn. Bkcy.).

    11th Circuit: Stock Transfer Not Fraudulent; Trustee May Not Recover Money

    ATLANTA - A panel of the 11th Circuit U.S. Court of Appeals on May 6 affirmed a ruling that a transfer involving shareholder stock in a bankrupt company was not fraudulent and, therefore, could not be recovered by the trustee, based on the shareholder agreement that governed the transaction (David H. Crumpton v. Richard Stephens $(In Re: Northlake Foods Inc.$), No. 12-15603, Chapter 11, 11th Cir.; 2013 U.S. App. LEXIS 9142).

    NECC Tort Claimants Envision $100M Fund, Reorganization Plan By December 2013`

    BOSTON - A bankruptcy committee representing tort claimants against New England Compounding Center (NECC) on May 2 told a federal court that its objective is to get a reorganization plan confirmed for December that will provide for distributions to tort victims and other creditors from aggregate contributions to the plan exceeding $100 million (In Re: New England Compounding Pharmacy, Inc. Products Liability Litigation, MDL Docket No. 2419, No. 1:13-md-2419, In Re: New England Compounding Pharmacy Cases, No. 12-12052, D. Mass.).

    FDIC: Bank Of America's Claim To $1.7 Billion In Taylor Bean Bankruptcy Is 'Moot'

    WASHINGTON, D.C. - The Federal Deposit Insurance Corp. on May 3 moved in the U.S. District Court for the District of Columbia for dismissal of claims made by Bank of America N.A., the indenture trustee for short-term notes issued by a division of bankrupt mortgage company Taylor Bean Whitaker Mortgage Corp. (TBW), arguing that the bank's claim to $1.7 billion in funds is "prudentially moot" (Bank of America National Association v. Federal Deposit Insurance Corporation, No. 10-01681, D. D.C.).

    Trustee In 'Girls Gone Wild' Bankruptcy Subpoenas 8 People Tied To Parent Company

    LOS ANGELES - The trustee in the Chapter 11 bankruptcy of GGW Brands LLC, the parent company for the company that produces adult videos under the name "Girls Gone Wild," on May 3 filed notice in the U.S. Bankruptcy Court for the Central District of California that he was serving subpoenas on eight individuals, compelling them to testify and produce documents in connection with GGW's bankruptcy proceeding (In Re: GGW Brands LLC, No. 13-15130, Chapter 11, C.D. Calif. Bkcy.).

    U.S. Trustee: $15 Million Sought For Financial Advisers Of AMR Not Justified

    NEW YORK - The U.S. trustee in the Chapter 11 bankruptcy of AMR Corp., the parent company of American Airlines Inc., on May 2 objected to the application of AMR and the Official Committee of Unsecured Creditors (the committee) seeking approval of $15 million for two separate firms that act as AMR's financial advisers (In Re: AMR Corporation, No. 11-15463, Chapter 11, S.D. N.Y. Bkcy.).

    Patent Claim For More Than $4.12 Million Against K-V Discovery Is Valid, Lab Says

    NEW YORK - A pharmaceutical laboratory on May 1 filed a brief opposing bankrupt K-V Discovery Solutions Inc.'s attempt to reclassify certain bankruptcy claims, arguing that it has a valid claim for more than $4.12 million related to a patent that it says a division of K-V Discovery infringed (In Re: K-V Discovery Solutions Inc., No. 12-13346, Chapter 11, S.D. N.Y. Bkcy.).

    Reorganization Plans For GIT, NARCO Become Effective

    PITTSBURGH - The plans of reorganization for refractory products manufacturers Global Industrial Technologies Inc. (GIT) and North American Refractories Co. (NARCO), which include multimillion-dollar trusts to pay asbestos and silica personal injury claims, became effective April 30, more than 11 years after the companies filed Chapter 11 petitions, according to notices filed May 1 in a Pennsylvania federal bankruptcy court (In re: Global Industrial Technologies, Inc., et al., No. 02-21626, and In re: North American Refractories Co., et al., W.D. Pa. Bkcy.).

    Creditors: MF Global Plan Of Liquidation Violates Code; Bankruptcy Court Erred

    NEW YORK - Creditors Sapere Wealth Management LLC, Granite Asset Management and Sapere CTA Fund L.P. (collectively, the Sapere entities) on May 2 filed a statement of issues on appeal pertaining to the bankruptcy court's confirmation of the plan of liquidation proposed by MF Global Holdings Ltd. (MFGH), contending the plan violates the Bankruptcy Code (In Re: MF Global Holdings Ltd., No. 11-15059, Chapter 11, S.D. N.Y. Bkcy.).

    Dewey & LeBoeuf Executives: $19.5M Deal With Insurer Lacks 'Supportable Basis'

    NEW YORK - Two former executives with bankrupt law firm Dewey & LeBoeuf on May 2 filed a brief objecting to the more than $19.5 million settlement reached among the Dewey & LeBoeuf Liquidation Trust, XL Specialty Insurance Co. and Steven H. Davis, on grounds that the liquidating trustee has failed to provide any evidence in supporting the deal other than his own "self-serving, conclusory statements" that the agreement is favorable to the liquidation trust (In Re: Dewey & LeBoeuf, No. 12-12321, Chapter 11, S.D. N.Y. Bkcy.).

    2nd Circuit Affirms $33.72M Kodak Award In Asia Optical Patent Dispute

    NEW YORK - The Second Circuit U.S. Court of Appeals on May 1 affirmed a ruling by a district court awarding bankrupt Eastman Kodak Co. more than $33.72 million in a patent licensing dispute with Asia Optical (Eastman Kodak Company v. Asia Optical Company Inc., No. 3206, 2nd Cir.).

    Nortel: $7.5B Asset Appeal 'Premature'; 3rd Circuit Certification Unwarranted

    WILMINGTON, Del. - Bankrupt Nortel Networks Inc. on May 1 objected to the motion filed by joint administrators of Nortel's bankruptcy estate pertaining to the allocation of $7.5 billion in asset sale proceeds, contending that the interlocutory appeal should not be certified directly to the Third Circuit U.S. Court of Appeals (In Re: Nortel Networks Inc., No. 09-10138, Chapter 11, D. Del. Bkcy.).

    Bankruptcy Judge Proposes Dismissal Of Insolvent Insurer's Breach Of Duty Claim

    WEST PALM BEACH, Fla. - A Florida bankruptcy judge on April 30 proposed that an insolvent insurer's breach of fiduciary duty claim against its former director be dismissed based on a lack of personal jurisdiction (British American Insurance Company Ltd. v. Robert Fullerton, et al., No. 11-03118, S.D. Fla. Bkcy.; 2013 Bankr. LEXIS 1755).

    Court: Bankrupt Company Must Find Someone Who Can Verify Responses

    LOS ANGELES - A judge must rule on a response to a request for admissions as unverified unless a bankrupt and dissolved asbestos defendant appoints someone with the power to decide whether its attorney may verify the response and thus waive attorney-client privilege, a California appeals panel held April 30 (Mary Melendrez, et al. v. Superior Court of State of California, County of Los Angeles, Special Electric Co. Inc., No. B243320, Calif. App., 2nd Dist., Div. 3; 2013 Cal. App. LEXIS 343).

    3rd Circuit: Debtor Fails To State 'Substantial Question' In Bankruptcy Appeal

    PHILADELPHIA - A panel of the Third Circuit U.S. Court of Appeals on May 1 refused to hear a debtor's appeal that a district court improperly denied her motion to stay eviction proceedings against her, ruling that she failed to demonstrate "a substantial question" of law that needs to be resolved (In Re: Cheryl Lucretia Springs, No. 13-1306, Chapter 7, 3rd Cir.; 2013 U.S. App. LEXIS 8872).

    Kodak, Kyocera Settle Patent Dispute For $4.95 Million

    NEW YORK - Kyocera Corp. on May 1 agreed to pay $4.95 million to bankrupt Eastman Kodak Co. to settle patent infringement claims and unconditionally release both parties from future litigation pertaining to the patents at issue (Kyocera Corporation v. Eastman Kodak Company $(In Re: Eastman Kodak Company$), Adv. No. 13-01093, No. 12-10202, Chapter 11, S.D. N.Y. Bkcy.).

    11th Circuit: Creditors That Filed Involuntary Bankruptcy Required To Post Bond

    ATLANTA - A panel of the 11th Circuit U.S. Court of Appeals on May 1 affirmed a bankruptcy court's decision that required creditors who had filed an involuntary bankruptcy to post a $100,000 bond (Fisher Island Limited v. Fisher Island Investments Inc., No. 12-13045, Chapter 11, 11th Cir.; 2013 U.S. App. LEXIS 8856).

    Flintkote Says Former Parent's Objections To Reorganization Plan Are Self-Serving

    WILMINGTON, Del. - The former parent of Chapter 11 debtor The Flintkote Co. is not concerned about asbestos personal injury claimants and is objecting to Flintkote's plan of reorganization merely to use the bankruptcy case to its own litigation advantage, Flintkote says in an April 29 brief in the former parent's Delaware federal court appeal of the plan's confirmation (In re: The Flintkote Co., et al. [Imperial Tobacco Canada Limited, et al. v. The Flintkote Company, et al., No. 13-227, D. Del.]).

    Kodak Reorganization Plan: $49.2M In Claims Fully Paid; Others Partially Recovered

    NEW YORK - Bankrupt Eastman Kodak Co. on April 30 filed its joint plan of reorganization, which would pay priority claims and secured claims in full, for a total recovery of $49.2 million, while the recovery of $2.8 billion in general unsecured claims is projected to be better than if Kodak converted the case to Chapter 7 liquidation (In Re: Eastman Kodak Company, No. 12-10202, Chapter 11, S.D. N.Y. Bkcy.).

    Bankruptcy Judge: Committee Not Required To Provide RDA Confidential Information

    NEW YORK - The federal bankruptcy judge presiding over the Chapter 11 proceeding of RDA Holding Co., the company that owns Readers' Digest publications, on April 30 ruled that the Official Committee of Unsecured Creditors is not authorized or required to provide access to confidential or privileged information (In Re: RDA Holding Co., No. 13-22233, Chapter 11, S.D. N.Y. Bkcy.).

    9th Circuit: Transfer Of More Than $11.99 Million May Have Been Fraudulent

    SAN FRANCISCO - A panel of the Ninth Circuit U.S. Court of Appeals on April 30 vacated and remanded to a district court a case involving a trustee's complaint that a debtor company made a fraudulent transfer greater than $11.99 million, ruling that the district court did not apply the correct standard in its initial ruling (Official Committee of Unsecured Creditors of the Estate of Fitness Holdings International Inc. v. Hancock Park Capital II [In the Matter of: Fitness Holdings International Inc], No. 11-56677, Chapter 11, 9th Cir.; 2013 U.S. App. LEXIS 8729).

    Committee In B456 Case Says GM's Claim Greater Than $27.91M Is 'Deficient'

    WILMINGTON, Del. - The Official Committee of Unsecured Creditors in the Chapter 11 bankruptcy of B456 Systems Inc., the renamed version of alternative energy company A123 Systems, on April 29 filed a brief objecting to a more than $27.91 million claim asserted by General Motors LLC that alleges breach of contract (In Re: B456 Systems Inc., No. 12-12859, Chapter 11, D. Del. Bkcy.).