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Oaktree, Molycorp Inc.’s senior lender, is battling a committee of lower-ranking creditors over the size of its loans and how best to restructure the company, Bloomberg News reported yesterday. Oaktree and Molycorp agree that loans made before and after the bankruptcy bring the amount owed to Oaktree to $514 million. Other creditors, including bondholders owed $1.4 billion, are disputing that figure. Molycorp filed for bankruptcy in June after a drop in rare-earth prices made its California mine unprofitable. The company is planning to either sell itself at an auction or, if no bids are high enough, reorganize and reduce debt by turning itself over to Oaktree. The case is In re Molycorp Inc., 15-bk-11357, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Bankrupt coal miner Arch Coal Inc. has reached a deal with the state of Wyoming that will provide it with temporary relief from liability for millions of dollars in future cleanup costs for coal mines, Reuters reported yesterday. In the past, companies like Arch Coal have covered the costs of cleaning up mines through self-bonds that allowed them to use their balance sheet as a guarantee. That practice has come under federal scrutiny since Arch Coal, the second-largest U.S. coal miner, and Alpha Natural Resources filed for bankruptcy, potentially leaving taxpayers exposed to billions of dollars in cleanup costs. Arch said in a court filing that the state of Wyoming and the Wyoming Department of Environmental Quality have agreed to accept $75 million from a debtor-in-possession financing carve-out in the bankruptcy. That amount will cover cleanup costs related to mines operated by Arch, including Black Thunder, one of the country's largest mines, as well as the Coal Creek and Vanguard mines. An additional $17 million will be provided in third-party collateral for four smaller mines, it said.

Senior creditors of Caesars Entertainment Corp.’s bankrupt operating unit are threatening to abandon a framework agreement and propose their own formal restructuring plan as soon as Monday, Reuters reported yesterday. Until now, senior lenders and bondholders have been the only creditors to back a framework agreement to slash some $10 billion of debt from Caesars' operating unit, which filed for bankruptcy with $18 billion of debt in January 2015. But since that deal was revised in October, they say that there has been "a very substantial decline in the value of the debt and equity securities proposed to be provided" to them, according to a bankruptcy court filing yesterday.

Wall Street financier Lynn Tilton on Friday said that her firm Patriarch Partners LLC will become a "family office" and will step down as collateral manager of three investment pools that helped fund her portfolio of troubled companies, Reuters reported. The decision follows years of legal battles with the bond insurer MBIA Inc. It also followed Patriarch's bid on Nov. 22 to put one of the pools, a collateralized loan obligation called Zohar I, into involuntary bankruptcy to keep MBIA from seizing its assets. That effort came two days after the CLO defaulted on some notes, forcing MBIA to make a $149 million payment. Tilton and Patriarch will withdraw their opposition to MBIA's bid to dismiss the involuntary bankruptcy petition.

The Justice Department, the Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau, along with 49 state attorneys general and the District of Columbia’s attorney general, have reached a $470 million agreement with HSBC Bank USA NA and its affiliates (collectively, HSBC) to address mortgage origination, servicing and foreclosure abuses, according to a Justice Department press release on Friday. The settlement reflects a continuation of enforcement actions by the department and its federal and state enforcement partners to hold financial institutions accountable for abusive mortgage practices. The settlement parallels the $25 billion National Mortgage Settlement (NMS) reached in February 2012 between the federal government, 49 state attorneys general and the District of Columbia’s attorney general and the five largest national mortgage servicers, as well as the $968 million settlement reached in June 2014 between those same federal and state partners and SunTrust Mortgage Inc. “Even as the mortgage crisis recedes, the U.S. Trustee Program will continue to combat mortgage servicer abuse of the federal bankruptcy laws so that homeowners are given their legal right to try to save their homes,” said Director Cliff White of the Justice Department’s U.S. Trustee Program. “This settlement holds HSBC accountable for its actions and helps to protect the most vulnerable homeowners.”

KaloBios Pharmaceuticals, the struggling drug company Martin Shkreli took over in November, may survive bankruptcy and its brush with Shkreli, who was ousted as chief executive after his arrest on securities fraud charges, the Wall Street Journal reported today. Bankruptcy Judge Laurie Selber Silverstein rejected a request to have a trustee appointed to oversee KaloBios’s affairs, after warnings that displacing the leadership team that came on board after Shkreli left would upset the prospective deal. Revived hope of a deal for a potentially lucrative drug, benznidazole, could pull KaloBios out of chapter 11 bankruptcy, the company’s lawyers told Judge Silverstein at a hearing yesterday. KaloBios is lining up financing to move ahead on a restructuring built around benznidazole, a treatment for Chagas' disease. The affliction is on an FDA list of ailments that could earn a ticket for fast-track regulatory treatment known as a priority review voucher. Priority review vouchers have sold for hundreds of millions of dollars, as Shkreli told investors in December, when he was trumpeting the commercial outlook for benznidazole.

The city of San Bernardino, Calif., which has been stuck in bankruptcy for more than three years, has reached a repayment deal with its fiercest courtroom foe: a European bank owed about $52 million worth of municipal bonds, Dow Jones Daily Bankruptcy Review reported today. San Bernardino lawyers told Judge Meredith Jury that they have reached a tentative settlement with the bondholder but refused to say how much money the 200,000-resident city offered to repay. Under an earlier proposal, the Luxembourg bank that owns the bonds would get $655,000 plus interest. The deal still needs approval from bank officials and San Bernardino city councilors, according to documents filed in U.S. Bankruptcy Court in Riverside, Calif. The potential deal would silence one of the last remaining major critics of the city's turnaround strategy, making it easier for the city to get out of the bankruptcy case it filed in 2012. Bank lawyers have objected to the city's plan, saying that the city should raise taxes instead of forcing steep cuts on debt holders.

The bankrupt operating unit of Caesars Entertainment Corp. yesterday proposed mediation in its chapter 11 case, potentially changing the course of the litigious, drawn-out bankruptcy proceedings, Reuters reported yesterday. Angry creditors have accused Caesars of looting the operating unit before its bankruptcy to benefit private equity owners Apollo Global Management and TPG Capital Management, creating a stumbling block for any restructuring deal in the $18 billion bankruptcy. In a motion filed in the Northern District of Illinois court yesterday, Caesars Entertainment Operating Co. said that it believes a mediator would help creditors reach a compromise. The proposal comes ahead of the expected release later this month of an independent probe into pre-bankruptcy transactions.