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Bank of New York Mellon Corp. has agreed to end eight years of litigation in which it sought unsuccessfully to recoup $312 million it lent a Chicago-area money manager that collapsed in 2007, and whose former chief is now in prison for fraud, Reuters reported yesterday. According to a Wednesday court filing, Bank of New York Mellon will be treated as an unsecured creditor with a $312 million claim in the bankruptcy of Sentinel Management Group Inc., formerly of Northbrook, Ill. The settlement with Sentinel bankruptcy trustee Frederick Grede requires court approval. It followed the Jan. 8 rejection by the federal appeals court in Chicago of the bank's effort to be treated as a secured creditor with a higher priority claim. U.S. Circuit Judge Richard Posner said that an unsecured claim was appropriate because the bank had been aware of suspicious facts that should have led it to probe whether Sentinel and its chief Eric Bloom were involved in wrongdoing. It is unclear how much the bank will eventually recover on its claim, but it previously took a $170 million pre-tax write-off, or $106 million after taxes, as a result of Judge Posner's decision. Read more. 

For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case.

AstroTurf LLC has filed for bankruptcy protection after a $30 million loss in a patent fight with France’s Tarkett, which makes the rival FieldTurf synthetic-grass product, the Wall Street Journal reported today. The bankruptcy filing is meant to preserve AstroTurf’s ability to challenge the judgment while allowing it to sell its business in a deal that promises a return to creditors. Private equity-owned Sportfield Deutschland Holding GmbH has offered $92.5 million. Court papers indicate AstroTurf will receive only about $16 million of the purchase price if the deal clears bankruptcy court. Other sellers, including AstroTurf owner Textile Management Associates Inc., would collect the rest of the money under the proposed transaction. Court papers say Textile Management controls AstroTurf’s intellectual property and the deal won’t work without it. Textile Management is also AstroTurf’s chief secured lender, owed nearly $38 million. The loan is connected to a promissory note signed in December 2015, less than three months after a jury found the company had infringed a patent controlled by Tarkett’s FieldTurf USA Inc. unit.

"Dance Moms" star Abby Lee Miller pleaded guilty Monday to bankruptcy fraud and failing to report thousands of dollars in Australian currency she brought into the country, the Associated Press reported yesterday. Miller pleaded guilty to one count of concealing bankruptcy assets and one count of structuring international monetary transactions. She was charged last fall with illegally trying to hide $775,000 worth of income from the Lifetime network reality show and spinoff projects during her Chapter 11 bankruptcy. Authorities later accused her of dividing more than $120,000 into plastic bags and having others in her group put the bags in their luggage in August 2014, violating a law requiring people to report bringing more than $10,000 worth of foreign currency into the country. Read more. 

Don’t miss the “Practicing in the Limelight: The Challenges Faced in Cases Involving High-Profile Debtors” session at ABI’s 11th Annual Northeast Consumer Forum on July 14-16! 

F. Lee Bailey, the superstar lawyer who was part of O.J. Simpson’s defense team, has filed for bankruptcy in federal court in Maine in an attempt to discharge a federal tax debt of nearly $5.2 million, the Portland (Maine) Press Herald reported today. Debts to the Internal Revenue Service are not normally discharged in bankruptcy proceedings, but Bailey said on Friday that they can be after a period of time and as long as he has complied with certain conditions, such as filing and paying his taxes on time since the original taxes and penalties were assessed. He owes the money from a dispute over his reportable income from 1993 to 2001. Bailey was disbarred in Florida in 2001 over his handling of shares of stock owned by a client who pleaded guilty to drug smuggling and money laundering. That stock also led to the dispute with the IRS, which said Bailey owed $1.9 million because of his failure to report some of the stock proceeds as income. With interest and penalties, the IRS filed liens against Bailey totaling $4.5 million, which has since grown to nearly $5.2 million.

Hulk Hogan, whose invasion-of-privacy lawsuit drove Gawker Media LLC into bankruptcy, was named to the official committee of unsecured creditors in the web company’s chapter 11 case, Bloomberg News reported on Friday. The former pro-wrestler is listed under his real name, Terry Gene Bollea, on the roster of committee members filed on Friday in Manhattan bankruptcy court by the U.S. Trustee, who chooses members of the panel. Gawker has said it’s seeking to sell its assets free and clear of legal liabilities at and auction next month. The digital media company filed for bankruptcy this month after losing a $140 million verdict for posting snippets of a sex tape featuring Hogan. Gawker appealed the verdict. Read more. 

Get the expert advice you need when facing the challenge of representing creditors’ committees as they try to give holders of general unsecured claims a voice in whether a debtor will be reorganized, sold as a going concern or liquidated. Pick up a copy of ABI’s Representing the Creditors' Committee: A Guide for Practitioners.