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Timothy Blixseth, former owner of the bankrupt Yellowstone Mountain Club LLC, has been jailed for almost nine months — not for a crime, but for contempt from violating a bankruptcy court injunction and subsequent district court orders, according to a report today from ABI Editor at Large Bill Rochelle. Unless the Ninth Circuit intervenes, Blixseth’s incarceration could last a year or more; District Judge Sam E. Haddon of Butte, Mont., handed down a 40-page opinion on Dec. 30 explaining why Blixseth is still in civil contempt of an order directing him to account for how he spent $13.8 million obtained from the sale of a Mexican resort in violation of a bankruptcy court order.

Oil and gas company American Standard Energy Corp. is suing two of its former directors, saying they fraudulently transferred valuable assets out of the company before its slide into bankruptcy, Dow Jones Daily Bankruptcy Review reported today. The company says that the actions of the two — a father- and son-in-law team that were at one time its largest shareholder and CEO, respectively — have jeopardized a $20 million bankruptcy sale of the company and could result in a reduction of $7 million in the purchase price. American Standard filed a complaint against the men and a company they control, in conjunction with its bankruptcy case, in an attempt to recoup any resulting creditor losses. Read more. (Subscription required.) 

For further analysis of fraudulent transfers, be sure to pick up ABI’s Advanced Fraudulent Transfers: A Litigation Guide. 

Distressed-company investor Lynn Tilton lashed out at the Cayman Islands corporate directors who moved to block her attempt to force one of her debt-investing vehicles into bankruptcy, Dow Jones Newswires reported yesterday. She says the directors have ignored their duties to Zohar — a collateralized loan obligation, or CLO, fund — in favor of protecting the interests of the Cayman Islands, which is receptive to creators of sophisticated financial vehicles like Zohar-I. It is a conduit stuffed with loans to troubled companies, and the conduit itself is in trouble. It missed a payoff date in November and was bailed out by bond insurer MBIA Inc. Tilton, who was accused of fraud by the Securities and Exchange Commission in connection with her CLO operation, has denied wrongdoing and vowed to fight the charges. Now she is battling directors in the Cayman Islands, who have said her attempt to invoke bankruptcy protection for Zohar-I runs afoul of the agreements that created the specialized investment vehicle.

American Apparel Inc. is seeking to keep a tight grip on its bankruptcy case as its creditors cast their votes on the retailer's plan to exit bankruptcy protection, Dow Jones Daily Bankruptcy Review reported today. In a court filing on Monday, lawyers for American Apparel requested a 90-day extension of the company's exclusive right to file a reorganization plan. The company's request comes just a few weeks after ousted American Apparel founder Dov Charney hired Cardinal Advisors to help him line up investors that would keep him involved with the troubled retail chain. Charney has been garnering interest from new investors, and some bids could be completed in the upcoming weeks. The process has especially interested institutional investors. It is still unclear what role Charney would play at the company if he were to find an investor willing to buy it. A successful bid would most likely have to exceed $350 million to cover the money owed to bondholders in the bankruptcy process, as well as pay off the $90 million in postpetition financing and provide the $40 million of exit financing that is part of the chapter 11 plan.

Lehman Brothers Holdings Inc. is suing Daiwa Securities Capital Markets Co. over hundreds of soured swaps and options, claiming the Japanese investment bank shortchanged it on hundreds of derivatives contracts after Lehman’s bankruptcy to reap a multimillion-dollar windfall, the Wall Street Journal reported today. In a lawsuit filed with U.S. Bankruptcy Court in New York, lawyers for Lehman say the bank was “in the money” to the tune of $75 million on 955 derivatives transactions — mainly interest rate and credit default swaps — with Daiwa at the time of Lehman’s 2008 bankruptcy filing. Daiwa used “commercially unreasonable and bad-faith valuation techniques, including deducting tens of millions of dollars of ‘unwind costs’ that it did not incur” from its valuations of the derivatives transactions, Lehman’s lawyers claim in the suit, filed last week. Lehman is asking Bankruptcy Judge Shelley C. Chapman for the $75 million it says it was owed at the time the swaps were terminated, plus interest. It is also asking the judge to toss Daiwa’s $46 million claims against Lehman.

Caesars Entertainment Corp. defeated bondholder demands for an early resolution of a lawsuit alleging the casino company failed to honor guarantees of bonds issued by its bankrupt subsidiary, sending the case to trial, Reuters reported yesterday. U.S. District Judge Shira Scheindlin said yesterday that there were material disputes regarding a May 2014 stock sale and its impact on the guarantees on $750 million of unsecured bonds. Those disputes would have to be resolved by a trial, the judge said in a 31-page opinion that denied the bondholders' request for a quick ruling. Bondholders MeehanCombs Global Credit Opportunities Funds and Frederick Barton Danner alleged that Caesars violated the Trust Indenture Act, or TIA, by unilaterally releasing consent guarantees of bonds issued by its bankrupt operating unit. Scheindlin's ruling on Tuesday follows a similar decision in August in a case brought by representatives of other bondholders suing Caesars over similar violations of the TIA, a Great Depression-era law meant to protect bondholders. Caesars has said that if it loses the TIA cases it would likely be forced to join its operating unit in bankruptcy. Caesars said in court papers filed on Monday it would seek an injunction staying the case until 60 days after an independent examiner, Richard Davis, completed his investigation of alleged fraudulent transfers of the casino company's assets. The examiner was ordered by U.S. Bankruptcy Judge Benjamin Goldgar and the examiner's report is expected in early 2016.