LexisNexis® Legal Newsroom
    TD Bank, Rothstein Creditor Reach $41M Deal To Resolve Ponzi Scheme Claims

    FORT LAUDERDALE, Fla. - The federal bankruptcy judge presiding over the Chapter 11 proceeding of former law firm Rothstein Rosenfeldt Adler (RRA) on Feb. 26 agreed to a settlement in which TD Bank will pay $41 million to resolve allegations that it committed fraud and aided in money laundering as part of Scott Rothstein's Ponzi scheme that led to RRA's bankruptcy (In Re: Rothstein Rosenfeldt Adler, No.09-34791, S.D. Fla. Bkcy.).

    8th Circuit: Family Trust Cannot Block FDIC's Sale Of Debtor's Asset

    ST. LOUIS - A panel of the Eighth Circuit U.S. Court of Appeals on Feb. 27 ruled that anti-injunction provisions in federal law pertaining to financial institutions prevented a family trust from blocking the Federal Deposit Insurance Corp. from selling the asset of a bankrupt bank (Dittmer Properties v. Federal Deposit Insurance Corporation, No. 12-1329, 8th Cir.).

    Split 9th Circuit Says State Court Judgment Is Valid Claim In Bankruptcy

    SAN FRANCISCO - A divided Ninth Circuit U.S. Court of Appeals panel ruled Feb. 27 that a state court judgment for damages against a debtor is a valid claim in bankruptcy court and is not subject to bona fide dispute for purposes of 11 U.S. Code Section 303(b)(1) (Georges Marciano v. Steven Chapnick, et al. $(In Re: Georges Marciano$), No. 11-60070, Chapter 11, 9th Cir.).

    Wells Fargo Supports $21.6M Deal Between Stockton, Calif., And Insurer Ambac

    SACRAMENTO, Calif. - An official with Wells Fargo Bank on Feb. 26 filed a declaration in the U.S. Bankruptcy Court for the Eastern District of California approving the settlement of $21.6 million in debt payments between the bankrupt City of Stockton, Calif., and Ambac Assurance Corp. related to certificates that were issued to fund building projects (In Re: City of Stockton, California, No. 12-32118, Chapter 9, E.D. Calif. Bkcy.).

    Union Reserves Right To Sue Hostess For Damages Related To Sale Of Bread Assets

    NEW YORK - The group that represents the International Brotherhood of Teamsters in collective bargaining situations on Feb. 25 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York, seeking a reservation of its rights to pursue liquidated damages in the Chapter 11 bankruptcy proceeding of Hostess Brands Inc. (In Re: Hostess Brands Inc., No. 12-22052, Chapter 11. S.D. N.Y. Bkcy.).

    9th Circuit: Debt From Court Judgment Not Dischargeable Due To 'Malicious' Injury

    SAN FRANCISCO - A panel of the Ninth Circuit U.S. Court of Appeals on Feb. 22 ruled that a bankruptcy court properly determined that the debt owed by a man who lost a state court judgment because he had "willfully and maliciously" injured another man was nondischargeable (Heroico Martin Aguiluz v. Howard M. Jaffe $(In Re: Heroico Martin Aguiluz$), No. 11-690050, Chapter 7, 9th Cir.; 2013 U.S. App. LEXIS 3749).

    9th Circuit Says Debt From Breach Of Fiduciary Duty Not Dischargeable

    SAN FRANCISCO - A panel of the Ninth Circuit U.S. Court of Appeals on Feb. 25 ruled that a judgment against a debtor could not be discharged because the debt was the result of a court decision for breach of fiduciary duty while the debtor was acting as her husband's trustee (Leona Phyllis Ferrara v. May Jane Condit $(In Re: Leona Phyllis Ferrara$), No. 11-60051, Chapter 7, 9th Cir.; 2013 U.S. App. LEXIS 3868).

    Bankrupt Shipping Company OSG Sues BP For Violation Of Automatic Stay

    WILMINGTON, Del. - A subsidiary of bankrupt shipping company Overseas Shipholding Group Inc. (OSG) on Feb. 25 sued BP Oil Shipping Co. USA Inc. in the U.S. Bankruptcy Court for the District of Delaware, seeking declaratory relief and damages for alleged violations of the automatic stay pursuant to 11 U.S. Code Section 362 (OSG America Operating Company LLC v. BP Oil Shipping Company USA Inc. $(In Re: Overseas Shipholding Group Inc.$), No. 12-20000, Adv. No. 13-50854, Chapter 11, D. Del. Bkcy.).

    MSR Resort Creditors Object To Chapter 11 Plan, $1.49B Stalking Horse Deal

    NEW YORK - A group of creditors that invested in bankrupt MSR Resort Golf Course LLC on Feb. 25 filed an official notice of appeal of the order issued by the U.S. Bankruptcy Court for the Southern District of New York approving the resort's Chapter 11 plan and $1.49 billion asset sale (In Re: MSR Resort Golf Course LLC, No. 11-10372, S.D. N.Y. Bkcy.).

    Creditors Committee Seeks To Revive Case Against Principals Of Bankrupt WP Steel

    WILMINGTON, Del. - The Official Committee of Unsecured Creditors in the Chapter 11 bankruptcy of WP Steel Venture LLC on Feb. 22 moved in the U.S. Bankruptcy Court for the District of Delaware for permission to revive its case against Ira L. Rennert and Vincent J. Goodwin as the principals in charge of WP Steel and its holdings, alleging that they breached their fiduciary duties (In Re: WP Steel Venture LLC, No. 12-11661, Chapter 11, D. Del. Bkcy.).

    Trustee, Some Creditors Seek Removal Of Claims Against MF Global Bankruptcy Estate

    NEW YORK - The trustee and a group of creditors in the Chapter 11 bankruptcy of MF Global Holdings (MFGH) on Feb. 22 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York objecting to more than $138.11 million in claims brought by a separate group of creditors against the MFGH estate on grounds that they are superseded by other claims valued at more than $162.97 million (In Re: MF Global Holdings Ltd., No. 11-15059, Chapter 11, S.D. N.Y. Bkcy.).

    Bankrupt Broker Penson Seeks Permission To Tap Insurance Policy For Defense Costs

    WILMINGTON, Del. - Bankrupt financial services company Penson Worldwide Inc. on Feb. 21 moved in the U.S. Bankruptcy Court for the District of Delaware for permission to use its policy insuring the company's directors and officers to pay for defense costs associated with a federal investigation of Penson's operations prior to bankruptcy (In Re: Penson Worldwide Inc., No. 13-10061, Chapter 11, D. Del. Bkcy.).

    Federal Judge Remands Breach Of Contract Case Against Bankrupt RG Steel

    CHARLESTON, W.Va. - A federal judge in West Virginia on Feb. 21 remanded to state court a lawsuit brought by Mountain State Carbon LLC (MSC) against bankrupt RG Steel in which MSC contended that the steel company had breached its contract with MSC and stole excess coke that MSC stored at RG Steel's plant (Mountain State Carbon LLC v. RG Steel Wheeling LLC, No. 12-77, N.D. W. Va.).

    U.S. Bank Says Bankruptcy Court Erred In AMR Financing Ruling

    NEW YORK - U.S. Bank Trust National Association, which has filed an adversary proceeding against bankrupt American Airlines Inc., a subsidiary of bankrupt AMR Corp., on Feb. 22 filed a statement of issues on appeal in which it contends that a New York federal bankruptcy court erred when it ruled that repayment of financing notes does not require the payment of a make-whole amount (U.S. Bank Trust National Association v. American Airlines Inc. $(In Re: AMR Corporation$), No. 11-15463, Adv. No. 12-01946, Chapter 11, S.D. N.Y. Bkcy.).

    Tribune Litigation Trustee Seeks Recovery Of Transfers Related To Leveraged Buyout

    WILMINGTON, Del. - The litigation trustee in the Chapter 11 bankruptcy of media entity Tribune Co. on Feb. 20 moved in the U.S. Bankruptcy Court for the District of Delaware for authorization to be substituted as the plaintiff in certain adversary proceedings seeking to recover fraudulent transfers pertaining to the leveraged buyout of Tribune belonging to the litigation trust (In Re: Tribune Company, No. 08-13141, Chapter 11, D. Del. Bkcy.).

    Dewey & LeBoeuf: Liquidation Plan Proposed'In Good Faith'; Objections 'Improper'

    NEW YORK - Bankrupt law firm Dewey & LeBoeuf on Feb. 21 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York contending that its plan of liquidation was proposed in good faith and meets all the requirements of the Bankruptcy Code, despite objections from the firm's former partners (In Re: Dewey & LeBoeuf, No. 12-12321, Chapter 11, S.D. N.Y. Bkcy.).

    Creditor Wants To Sell Property Of Revstone Subsidiary For $4.5 Million

    WILMINGTON, Del. - A creditor of bankrupt Revstone Industries LLC on Feb. 20 filed a brief in the U.S. Bankruptcy Court for the District of Delaware, contending that it should be granted relief from the automatic stay to sell property belonging to one of Revstone's bankrupt subsidiaries (In Re: Revstone Industries LLC, No. 12-13262, Chapter 11, D. Del. Bkcy.).

    Company That Was Subject To Involuntary Chapter 7 Filing Seeks Move To Chapter 11

    BALTIMORE - Bankrupt Inner Harbor West LLC (IHW) on Feb. 19 moved in the U.S. Bankruptcy Court for the District of Maryland for conversion of its involuntary Chapter 7 petition to a voluntary Chapter 11 bankruptcy (In Re: Inner Harbor West LLC, No. 13-12198, Chapter 7, D. Md. Bkcy.).

    11th Circuit: Bank Of America Did Not Break Contract With Bankrupt Fontainebleau

    ATLANTA - A panel of the 11th Circuit U.S. Court of Appeals on Feb. 20 ruled that Bank of America and its affiliates properly rejected a loan request from bankrupt Las Vegas resort Fontainebleau (Avenue CLO Fund Ltd. v. Bank of America N.A., No. 11-10468, Chapter 7, 11th Cir.).

    Former Dewey & LeBoeuf Partner Sues Barclays For Loan He Says Is 'A Fabrication'

    NEW YORK - A former partner of bankrupt law firm Dewey & LeBoeuf on Feb. 15 sued Barclays Bank PLC, alleging that a purported letter agreement under which the bank loaned money to the partner to fund his capital account at the law firm should be rescinded (L. Londell McMillan v. Barclays Bank PLC, No. 13-1095, S.D. N.Y.).

    9th Circuit: Dischargeability Ruling Proper; Bankruptcy Code's Standard Firm

    SAN FRANCISCO - A panel of the Ninth Circuit U.S. Court of Appeals on Feb. 19 affirmed a bankruptcy court's ruling that denied a creditor the right to file a late appeal of a nondischargeability ruling, concluding that it was not permitted under the Bankruptcy Code (Amina Anwar v. D. Lee Johnson, et al., No. 11-16612, Chapter 7, 9th Cir.; 2013 U.S. App. LEXIS 3453).

    MF Global Proposes Plan Of Liquidation Using $70M In Exit Facility Financing

    NEW YORK - Bankrupt financial institution MF Global Holdings Ltd. (MFGH) on Feb. 15 filed a liquidation plan that relies on a $70 million exit facility to fund the plan (In Re: MF Global Holdings Ltd., No. 11-15059, Chapter 11, S.D. N.Y. Bkcy.).

    U.S. Trustee, Kaye Scholer Settle Dispute For $1.5M In GSC Bankruptcy

    NEW YORK - The U.S. trustee in the Chapter 11 bankruptcy of GSC Group Inc. on Feb. 15 moved in the U.S. Bankruptcy Court for the Southern District of New York for approval of a deal in which the law firm representing GSC would pay $1.5 million to the bankruptcy estate to settle claims against the estate as well as the U.S. trustee's allegations that the firm made false representations to the Bankruptcy Court (In Re: GSC Group Inc., No. 10-14653, Chapter 11, S.D. N.Y. Bkcy.).

    Readers' Digest Parent Company Files For Bankruptcy, With More Than $1.18B In Debt

    NEW YORK - The parent company that owns Reader's Digest on Feb. 17 filed for Chapter 11 bankruptcy for the second time in four years, citing debts greater than $1.18 billion (In re: RDA Holding Co, No. 13-22233, Chapter 11, S.D. N.Y. Bkcy.).

    U.S. Supreme Court: Solicitor General May Participate In Defalcation Arguments

    WASHINGTON, D.C. - The U.S. Supreme Court on Feb. 19 granted a request of the U.S. solicitor general to participate in oral arguments in a case to determine whether a defalcation was committed by a debtor who, before filing for bankruptcy, had been appointed the trustee of his father's life insurance trust and took out three loans from the trust he managed. Oral arguments are scheduled for March 18 (Randy Curtis Bullock v. BankChampaign, No. 11-1518, Chapter 7, U.S. Sup.).