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A man who was clubbed by Vallejo police while trying to walk away from them in 2003 is entitled to $50,000 in damages plus legal fees, a federal appeals court ruled yesterday in rejecting officers’ arguments that the damages should be slashed because the city later filed for bankruptcy, the San Francisco Chronicle reported yesterday. Vallejo’s 2008 bankruptcy, California’s largest municipal insolvency in 15 years, left its creditors with only 20 to 30 cents for every dollar they were owed. But the U.S. Court of Appeals for the Ninth Circuit said that Jason Deocampo’s suit and the jury’s verdict were aimed at the officers who injured him, not the city that employed them. Deocampo was also awarded at least $400,000 for his legal fees, a sum that might increase by another $100,000 for costs of the appeal.

Creditors of Oi SA, the Brazilian phone company that filed for bankruptcy with $20 billion of debt, view the restructuring plan the company presented on Monday as unfairly benefiting shareholders, Bloomberg News reported yesterday. The main issue is the right Oi has to redeem bondholders’ convertibles anytime it wants. Creditors argue that the option for early redemption gives current shareholders power to avoid dilution if the company manages to stage a turnaround, but leaves bondholders with a large stake if things go badly. The Rio de Janeiro-based operator proposed converting up to 32.3 billion reais ($10.1 billion) of bondholders’ debt into convertible bonds with a face value of 10 billion reais. Lenders would get 85 percent of the company if Oi doesn’t pay off the debt in three years — leaving current shareholders in control of the company for that time span, and potentially benefiting from any recovery. The creditors also oppose the 10-year grace period suggested for bank debt, considered too long, and the option shareholders have of using proceeds from asset sales to pay bondholders’ convertibles, which could avoid dilution.

A settlement could be reached within a month in one of the longest running and most expensive bankruptcies on record, a lawyer for Nortel Networks Corp.’s U.S. unit told an appeals court yesterday, the Wall Street Journal reported today. Nortel U.S. has been battling Canadian parent Nortel and British pensioners over how to divide $7.3 billion raised in the bankruptcy liquidation of the onetime telecommunications giant. A settlement would break an impasse that has lasted more than five years. Speaking at a hearing in the U.S. Court of Appeals for the Third Circuit, James Bromley, lawyer for Nortel U.S., said that the Nortel combatants will know by Oct. 7 whether the latest in a long series of mediation efforts will produce a deal. “We don’t have resolution yet,” Bromley said. If there is no settlement by Oct. 7, Nortel Canada, Nortel U.S. and European creditors will continue the court fights that have, over the years, pushed the professional fee totals to the $2 billion mark.

Korean shipping line Hanjin Shipping Co. Ltd. won an order yesterday from a U.S. judge extending bankruptcy protections so its vessels can dock at U.S. ports without fear creditors will try take actions against the ships, as they have in other countries, Reuters reported today. Bankruptcy Judge John Sherwood approved a motion by the world's seventh largest container carrier that sought to extend to the United States the protection from creditors that it has under receivership in South Korea. The order is temporary and Hanjin will need to return to court on Friday for a final order after talks with stakeholders to try to resolve complex problems involving ports, terminal operators and retailers, Judge Sherwood said. Hanjin filed for chapter 15 protection in the U.S. and sought an order recognizing proceedings in South Korea and protecting its U.S. assets. Some Hanjin vessels have not docked due to uncertainty about the company's finances. As of Monday, 70 Hanjin ships had been denied access to ports and three had been seized in Singapore and China by creditors through court orders. Read more. 

Cover all aspects of the UNCITRAL Model Law on Cross-Border Insolvency as well as chapter 15 of the Bankruptcy Code with ABI’s Chapter 15 for Foreign Debtors. 

Brazil's largest fixed line carrier Oi SA on Monday unveiled a debt restructuring proposal, offering to sell assets and proposing a debt-for-equity swap option that could mean a 70 percent haircut for bondholders, Reuters reported today. Oi filed for protection from creditors on June 20 in the country's biggest-ever bankruptcy case, involving 65.4 billion reais ($19.3 billion) in bonds, bank debt and operating liabilities. In a securities filing yesterday, Oi offered four payment options to unsecured creditors such as bondholders owed approximately 34 billion reais. At the same time, the company said it is willing to repay secured creditors such as the Brazil's BNDES development bank in full over the course of 15 years. Brazil's Oi offered to exchange up to 32.3 billion reais ($9.90 billion) in unsecured debt for equity under the plan, which would give lenders up to 85 percent of the company's capital, according to the filings.

South Korea’s Hanjin Shipping Co., one of the world’s largest container shipping companies, has filed for bankruptcy protection in the U.S. to protect its vessels from being seized by creditors, the Wall Street Journal reported on Saturday. Hanjin filed for protection under chapter 15 of the Bankruptcy Code on Friday, days after the company sought protection in South Korea on Wednesday. Hanjin is currently the largest shipping company in Korea, operating approximately 60 regular lines world-wide, with 140 container or bulk vessels, court papers said. It is ranked as the world’s ninth largest container shipping company, transporting over 100 million tons of cargo a year. Its failure would be the largest container-shipping failure in history, dwarfing all previous carrier bankruptcies. Since Hanjin called in the bankruptcy lawyer, the refusal of ports to handle its cargo has stranded 45 ships at sea, according to the company, and more than half a million containers. Read more. (Subscription required.) 

Cover all aspects of the UNCITRAL Model Law on Cross-Border Insolvency as well as chapter 15 of the Bankruptcy Code with ABI’s Chapter 15 for Foreign Debtors. 

Horsehead Holding Corp. was cleared to exit bankruptcy on Friday although a U.S. judge acknowledged that allegations by the zinc producer's shareholders that their investment was being unfairly wiped out came very close to derailing the company's plan, Reuters reported on Friday. Horsehead can now proceed with its plan that will eliminate most of its $427 million in pre-bankruptcy debt, cancel its stock and allow the company to emerge from chapter 11 under the control of its noteholders, led by Greywolf Capital Management. Horsehead had to defend its plan during a three-day trial against allegations by an official equity committee that noteholders were enriching themselves at shareholders' expense. The shareholders attacked a valuation by the Lazard investment bank and argued that Horsehead was a "loan-to-own" play by secured noteholders, who bought the company's debt at a discount and then provided a bankruptcy loan with strict provisions. Bankruptcy Judge Christopher Sontchi said that the noteholders "shot themselves in the foot" by including a "no-shop" provision in the bankruptcy loan. Without it, the company could have tested its value with an auction and avoided this week's trial that largely turned on experts' competing views of valuation. Judge Sontchi said that the evidence showed the company was worth around $650 million, or roughly equal to the claims held by creditors, leaving nothing for stockholders.