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James F. Lomma, the owner of a New York City crane that collapsed in 2008 and killed two people, filed for chapter 11 bankruptcy along with his companies in the wake of a $96 million jury award to the victims’ families last year, the Wall Street Journal reported today. In May 2008, a crane owned by Mr. Lomma’s New York Crane & Equipment Corp. collapsed on East 91st Street on the Upper East Side of Manhattan. The incident killed two men: crane operator Donald Leo and another worker, Ramadan Kurtaj. The following year, the families of Leo and Mr. Kurtaj each brought civil wrongful-death cases against Lomma. Criminal charges were also brought, but Lomma was acquitted. Lomma said in court papers that he decided to file for bankruptcy to try to preserve his businesses while he appeals the verdict. Adding that the decision to file for bankruptcy “is certainly not an easy one,” Lomma said the verdict “left the debtors no viable alternative.” The filing will halt attempts by creditors, including the families, to collect money while the companies and Lomma are in bankruptcy. Court papers say Lomma will ask for court permission to continue his appeal during the case.

A bankruptcy court judge approved the first major sale of real estate belonging to the Archdiocese of St. Paul and Minneapolis yesterday, and the church’s three remaining properties are expected to be sold in the months ahead to pay creditors, the Milwaukee Star Tribune reported today. Bankruptcy Judge Robert Kressel approved the $4.5 million sale of the Monsignor Hayden Center, which now houses most archdiocese offices, to its neighbor the Minnesota Historical Society. The archdiocese also asked the court yesterday to approve a purchase agreement for the archbishop’s residence and the chancery building, across from the St. Paul Cathedral. The agreement — for a price identified only as somewhere between $2.5 million and $3.5 million — is with United Properties Development and is already generating criticism. The sales come about a year after the archdiocese declared bankruptcy following a flood of clergy abuse claims. The buildings and property are its chief assets, with a combined value of at least $10 million. Those assets will be tapped to compensate more than 400 individuals who have filed abuse claims against the church in the past year.

American Apparel Inc., set to emerge from bankruptcy this month, has received a takeover bid of more than $200 million from an investor working with ousted Chief Executive Officer Dov Charney, Bloomberg News reported yesterday. Should the offer be accepted and a deal completed, the plan would be for Charney to return in some capacity to the company he founded in 1998. Charney was fired more than a year ago after allegations of misconduct, charges that his lawyer has denied. In his bid to return, Charney faces long odds because American Apparel’s bankruptcy case is reaching its final stages. Suffering declining sales and losses, the company sought protection from creditors in October with a prearranged plan that hands ownership of the company to bondholders, led by Monarch Alternative Capital, in exchange for a reduction in debt. The plan was supported by 95 percent of secured lenders, who will be fully repaid under the proposal.

PricewaterhouseCoopers agreed to pay $55 million to settle a class-action lawsuit accusing it of misleading investors in feeder funds that funneled their cash to Bernard Madoff, Dow Jones Daily Bankruptcy Review reported today. The cash deal, filed in court on Wednesday, heads off a trial that would have begun this week in which investors in Fairfield Greenwich Ltd. were set to accuse PwC affiliates of negligence in connection with their work auditing Fairfield's funds, which invested with Madoff. Investors have asked a federal judge to schedule a hearing in the spring to consider the deal, reached with PwC's Canadian and Dutch units as well as with PricewaterhouseCoopers International Ltd. Read more. (Subscription required.) 

For more on fraud and Ponzi scheme cases, including analysis of the Madoff case, be sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. 

Bankrupt San Bernardino, Calif., says that it can’t afford to pay more than 100 people who have sued San Bernardino for injuries and deaths allegedly caused by its police officers and employees, the Wall Street Journal reported today. Under the city’s bankruptcy plan, the city would spend $56.5 million in the next five years to hire more officers and buy new vehicles. The plan, however, would inflict some of the deepest cuts on people who have sued over incidents of alleged police brutality or excessive force. San Bernardino’s bankruptcy plan proposes a 1 percent payment rate, though city officials promised to negotiate each lawsuit separately. Some might get insurance money, the city said, though it hasn’t provided details. San Bernardino faced 109 lawsuits seeking a total of $19 million in “personal injury and bodily injury” claims against the city and its employees as of Nov. 25. Bankruptcy Judge Meredith Jury is scheduled to review objections to the city’s bankruptcy-exit summary at a March 9 hearing. If she approves the plan, it would go to creditors for a vote.

The Internal Revenue Service said that Texas tycoon Sam Wyly engaged in "lies, deception and fraud" in a years-long scheme to dodge taxes on $1.1 billion held in offshore trusts, Reuters reported yesterday. The IRS made those claims at the start of a trial in federal bankruptcy court in Dallas in which the agency is seeking $3.22 billion in back taxes, penalties and interest from Wyly and the widow of his late brother Charles, Caroline Wyly. Cynthia Messersmith, a U.S. Justice Department lawyer representing the IRS, said the Wylys had since 1992 used offshore trusts to avoid paying taxes on $1.1 billion in proceeds while exercising stock options and warrants of four companies on whose boards the brothers sat.

Union leaders won a battle against Wasco Inc., one of the country's largest commercial masonry companies, after a federal judge ruled that the Nashville-based company can't get out of paying millions of dollars in worker pensions using bankruptcy, Dow Jones Daily Bankruptcy Review reported today. In an opinion that rejected Wasco's debt-payment plan, U.S. District Court Judge Todd J. Campbell said that Wasco executives who paid out nearly $300,000 in bonuses as the company prepared to file for bankruptcy made financial decisions that were "inappropriate and troubling at best." At the time of the bonus payments, Wasco officials weren't making monthly payments into a pension fund that was owed, fund administrators' estimate, $6.3 million after the company cut ties with the International Union of Bricklayers and Allied Craftworkers in 2011. Under Wasco's bankruptcy-exit plan, the company would pay about $1 million into the pension fund instead. In response, Wasco officials said they disagree with Judge Campbell's Dec. 23 ruling and have appealed the decision to the Sixth U.S. Circuit Court of Appeals.

A year ago, District Judge Shira Scheindlin of Manhattan seemed on the cusp of single-handedly blowing up the reorganization of casino giant Caesars Entertainment Operating Co. Inc. before it even got started, according to an analysis by ABI Editor at Large Bill Rochelle. It is less clear now whether she will come down on the side of bondholders who are attempting to reinstate guarantees granted by its nonbankrupt parent, Caesars Entertainment Corp. Caesars believes that the parent’s guarantees of several billion in bonds terminated because the operating company was no longer a wholly owned subsidiary of the parent as the result of transactions in August 2014. Bondholders sued in Judge Scheindlin’s court in September 2014, contending that the federal Trust Indenture Act prevented the termination of the guarantees without consent from each and every bondholder.  Coincident with the casino operating company’s voluntary chapter 11 petition in Chicago in January 2015, Judge Scheindlin denied Caesars’ motion to dismiss. Her opinion seemed to indicate where she was ultimately headed when she said that removing the guarantees was “an impermissible out-of-court restructuring” that is “exactly what TIA Section 316(b) is designed to prevent.” Her two new opinions, on Dec. 29, 2015, and Jan. 5, 2016, show the danger of reading too much into a decision on a Rule 12 motion to dismiss, where allegations in a complaint must be taken as true. The new opinions both denied the bondholders’ motions for summary judgment to reinstate the guarantees. Judge Scheindlin found disputed issues of fact as to whether the Caesars operating company remained a wholly owned subsidiary. That question is significant because the indentures provide that the guarantees terminate when the operating company is no longer wholly owned.