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Hanjin, Ashley Furniture Battle Over Cargoes, Storage Fees

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More than a month after Hanjin Shipping Co. sought bankruptcy protection in South Korea and in courts around the world, customers are still fighting with the company over how to retrieve their goods, the Wall Street Journal reported today. Ashley Furniture Industries Inc. said that it has been left on the hook for cleaning up the logistical mess in the wake of Hanjin’s bankruptcy and is asking a U.S. judge to allow it to withhold damages from fees it owes to Hanjin. The South Korean shipping company, however, is refusing to release some of Ashley Furniture’s cargo until it is paid in full. Some of Ashley Furniture’s containers have been delivered or otherwise retrieved by the company, many of which are weeks behind schedule. Other containers, still stocked with goods, are floating on Hanjin ships or sitting idle on port tarmacs waiting to be released by the shipper. During a hearing Friday in Newark, N.J., lawyers for Ashley Furniture asked Bankruptcy Judge John Sherwood to help it recover damages of more than $1 million it said that it is owed for having to pick up containers delivered to the wrong ports.

Nortel Creditors Fail to Reach Deal on How to Split $7.3 Billion

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Warring national units of defunct Nortel Networks Corp. have failed to reach a deal on how to divide $7.3 billion raised in the bankruptcy liquidation of the company, a fallen icon of the Canadian technology scene, the Wall Street Journal reported today. The money has been tied up for years in court fights, which are set to continue in a federal appeals court in Philadelphia. Talks continue, according to a letter filed with the U.S. Court of Appeals for the Third Circuit, but efforts to settle the litigation have so far not panned out. Nortel U.S. is preparing once again to go to court against the Canadian parent company and European creditors, chiefly British pensioners, according to the letter, filed on Friday by one of Nortel U.S.’s lawyers Derek Abbott. The federal appeals court in the U.S. is being asked to overturn a bankruptcy judge’s decision on dividing the money on the grounds it is outside the bounds of the law. Nortel’s U.S. lawyers on Friday set out a schedule of briefing on the appeal, but left the dates blank, saying that they would like to take another month to try to reach agreement and end the litigation.

Fate of Embattled Gawker Website Still Uncertain

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The fate of the website embroiled in a continuing legal battle with retired professional wrestler Hulk Hogan remains unclear, according to a lawyer for Gawker Media, the Wall Street Journal reported today. The site, gawker.com, wasn’t included in last month’s sale of most of Gawker’s other assets to an arm of Univision Communications Inc. It remains a potentially valuable asset to be sold or otherwise monetized, the lawyer, Gregg Galardi, said Thursday during a bankruptcy court hearing in Manhattan. Gawker Media and founder Nick Denton have been dogged by a $130 million invasion-of-privacy judgment owed to the former wrestler, whose real name is Terry Bollea, stemming from a sex tape the site published in 2012. In March, a Florida jury awarded a total of $140 million in damages to Bollea. Denton, who is jointly liable for most of the $130 million award, is personally liable for an additional $10 million, court papers show. The mammoth judgment, which Gawker and Denton have vowed to appeal, forced both to seek chapter 11 protection earlier this year.

Corzine Set to Reach a $5 Million CFTC Deal on MF Global

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Jon Corzine is close to reaching a tentative agreement to resolve a U.S. regulator’s allegations that he failed to properly oversee MF Global Holdings Ltd. as the brokerage unit spiraled toward failure almost five years ago, Bloomberg News reported yesterday. Corzine, who earlier served as New Jersey’s governor, a U.S. senator and the co-chairman of Goldman Sachs Group Inc., may pay $5 million out of his own pocket to settle the claims from the Commodity Futures Trading Commission. The regulator is also seeking a lifetime ban from personally trading other people’s money in the futures industry. The CFTC alleges Corzine didn’t fix inadequate controls that led to $1 billion in missing customer funds, that he was aware of the New York-based firm’s extreme shortage of cash and that he didn’t ask questions about the origins of funds used to make transfers that he ordered. Corzine has previously argued that he never requested any misuse of customer funds to help his firm stay afloat as it dealt with margin calls on bad bets. He testified to Congress under subpoena and under oath that he asked that overdrafts with JPMorgan Chase & Co. be corrected.
 
The fiduciary duties required of directors of potentially failing companies are covered in <em>The Depths of Deepening Insolvency</em>, available at the ABI bookstore. Purchase a copy today.

Worldwide Golf Eyes U.S. Assets of Bankrupt Chain Golfsmith

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Worldwide Golf Shops is exploring an offer for the U.S. business of bankrupt chain Golfsmith International Holdings Inc., as the golf retail sector grapples with the sport's waning popularity, Reuters reported yesterday. Golfsmith, the world's largest specialty golf retailer, filed for chapter 11 bankruptcy in the U.S. and for creditor protection in Canada last month, amid fierce competition from discount retailers Wal Mart Stores Inc. and Amazon.com Inc. Golfsmith's owner is OMERS Private Equity Inc, the buyout arm of one of Canada's largest pension funds. Golfsmith, which has 109 stores across the United States, filed for bankruptcy with a plan to find a buyer for its U.S. business, reorganize on a smaller scale or liquidate, according to court documents. Bids for Golfsmith's U.S. business are due on Oct. 17, and an auction is scheduled for two days later, with the goal of closing a sale before the start of the holiday season, according to court documents. Golfsmith is already shutting down some stores to save money. It is not yet clear if Worldwide Golf is eyeing the entire U.S. business of Golfsmith or individual assets. Read more.
 
 
Does bankruptcy still work for retail? Panel at today’s Views from the Bench program will explore the retail landscape. Walk-ups welcome!
 

Parmesan Fraud Chief May Get Food Pantry Time Instead of Jail

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In a request seeking to fit the punishment to the crime, the U.S. is asking that the head of a company that passed off fake grated Parmesan cheese as the real thing be sentenced to time at a food pantry or soup kitchen. While jail remains an option, sentencing documents filed Tuesday by federal prosecutors in U.S. District Court for western Pennsylvania are only asking that Michelle Myrter, president of Castle Cheese Inc. in Slippery Rock, Pa., receive 0 to 6 months in lockup, along with her community service. Her attorney has asked for probation. Myrter pleaded guilty seven months ago to federal misdemeanor charges involving food adulteration. The prosecutors said her company and two others controlled by her family made and distributed hundreds of thousands of pounds of fake cheese, passing it off as 100 percent Parmesan to stores around the country between 2010 and 2013. The other two companies charged — Universal Cheese & Drying Inc. and International Packing LLC — also pleaded guilty earlier this year to charges of conspiracy and money laundering. These companies are no longer operating and have been unable to pay $1 million in fines that were part of their plea agreements.

SunEdison Said to Map Restructuring Plan With TerraForm Stake

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Almost six months after filing the biggest U.S. bankruptcy of 2016, SunEdison Inc. is taking steps to work out a reorganization plan without liquidating a prize asset: its controlling stake in TerraForm Power Inc., Bloomberg News reported today. TerraForm Power, a so-called yieldco that owns solar and wind projects developed by its parent, has begun talks with SunEdison’s creditors to start the process of evaluating the TerraForm assets. Under such a reorganization, SunEdison could keep its shares in the yieldco and restructure around it. This latest stage in the bankruptcy follows months in which SunEdison marketed solar and wind projects around the world without declaring outright whether it would emerge from chapter 11 as a going concern or liquidate altogether. The company in July said  that it had extended a deadline to present lenders with a plan — without specifying a new date. 

U.S. Judge Halts Remaining Litigation Against Caesars

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A U.S. judge on Wednesday halted a lawsuit against Caesars Entertainment Corp., saying that it could derail last week's $5 billion agreement that was aimed at extracting the casino company from a costly bankruptcy, Reuters reported today. While a vast majority of Caesars creditors agreed to drop some $13 billion in legal claims against the casino group last week, a hedge fund with a $9.4 million claim refused to back the deal and sought to pursue its lawsuit. Trilogy Capital Management is one of several hedge funds that had accused Caesars of scrapping a guarantee on the debt of its bankrupt subsidiary, Caesars Entertainment Operating Co. Inc. (CEOC). A judgment in New York was due as soon as today. "The risk that the Trilogy action will derail the reorganization is too great," Bankruptcy Judge Benjamin Goldgar said yesterday. CEOC has secured the support of creditors who until last week were threatening its Nasdaq-listed parent with billions of dollars in claims over a series of transactions prior to the unit's bankruptcy filing in January 2015 with $18 billion of debt.

Florida Biopharma's Bankruptcy Leaves Big Firms Holding Bag

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Rock Creek Pharmaceuticals Inc. and two subsidiaries filed for bankruptcy in Delaware last week, owing nearly $3.7 million to lawyers from more than 20 firms, the American Lawyer reported today. Big firms make up half of Rock Creek’s 20 largest unsecured creditors, including legal giants like Chadbourne & Parke; Crowell & Moring; Foley & Lardner; K&L Gates; McGuireWoods; Morgan, Lewis & Bockius; Skadden, Arps, Slate, Meagher & Flom; and Steptoe & Johnson. The Sarasota, Fla.-based biopharmaceutical company, once known for its ties to scandal-plagued former Virginia Gov. Robert McDonnell under its former name Star Scientific Inc., is being advised by Delaware’s Ciardi Ciardi & Astin in its chapter 7 case, a process that usually results in the liquidation of a debtor. John “Jack” McLaughlin Jr., a Ciardi partner advising Rock Creek, did not respond to a request for comment about his client’s outstanding legal bills.