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A Washington state court jury on Friday found Ernst & Young liable for millions of dollars in losses a Washington investment firm took from the collapse of Bernard Madoff’s Ponzi scheme, the Wall Street Journal reported on Saturday. Steven W. Thomas, attorney for FutureSelect Portfolio Management Inc., said that the jury found the Big Four auditing firm was negligent in its work as auditor for a feeder fund that pooled investors’ cash and funneled it Madoff’s way. FutureSelect claimed that Ernst & Young, as auditor, supplied false information that FutureSelect Portfolio Management Inc. relied on to invest with the feeder fund. FutureSelect, of Redmond, Wash., invested approximately $200 million in a feeder fund that sent its money to Madoff, whose 2008 arrest exposed a massive Ponzi scheme in which investors lost more than $17 billion. In 2010, FutureSelect sued Ernst & Young, accusing it of negligence and seeking to recover its losses.

A&P was granted another 120 days to file its bankruptcy plan, shifting the deadline to mid-March, and it was also given the green light to sell the Ramsey Pathmark to an Italian-themed supermarket chain, in court hearings on Friday, NJ.com reported on Saturday. Attorneys for A&P told Bankruptcy Judge Robert Drain that the company still plans to close all of its remaining supermarkets by the end of November, but that it needs the additional time to sell its assets and present its plan for a chapter 11 reorganization. Ray Schrock, lead attorney for A&P, said that as of Friday the company had sold 119 stores to new owners, and 79 more supermarkets will be sold by Dec. 9. A&P is still seeking buyers for 57 supermarkets, Schrock said.

Attorneys for a New Mexico diocese and its insurance companies say they are optimistic they will soon reach a resolution during mediation talks in their bankruptcy proceedings, the Associated Press reported on Friday. At a status conference last Tuesday, attorneys said that they believe a successful resolution might be obtained during mediation talks scheduled to take place in Phoenix Dec. 3-4. At the conference, attorneys for the Diocese asked Bankruptcy Judge David T. Thuma to postpone any court decisions until after the mediation, and Judge Thuma agreed. Read more. 

For the latest developments on diocesan bankruptcies, be sure to attend the session at this year’s ABI Winter Leadership Conference. Click here to register. 

New York taxi mogul Evgeny “Gene” Freidman has been accused of transferring more than $70 million worth of real estate into trusts in a game of keep-away from ex-lender Citibank N.A., which is trying to take over the licenses that Freidman’s companies use to operate 46 taxis in the city, the Wall Street Journal reported today. In a lawsuit, Citibank officials said that Freidman transferred properties several months after the bank sued in March to collect some $34 million in unpaid loans—an improper maneuver to keep the properties from the bank and other creditors who are pursuing his companies for money. Worried that the trust controllers — Freidman’s lawyer and two business associates — will move the properties even further out of reach, Citibank officials asked a bankruptcy judge last week to forbid Freidman from transferring any more of his assets.

Corruption was rampant at a nonprofit entity that managed 35,000 acres of watershed for Newark, New Jersey, with the executive director secretly writing checks to herself and squandering public money in high-risk margin trading, state investigators reported last year, Bloomberg News reported yesterday. The Newark Watershed Conservation & Development Corp. filed for bankruptcy, and its trustees have now placed blame for the mismanagement on 18 people. They include Cory Booker, who was mayor of Newark before joining the U.S. Senate in October 2013, and Representative Donald Payne Jr., who was City Council president before entering Congress in 2012. Trustees of the watershed sued Booker, Payne and the others in bankruptcy court for their role in the misappropriation and waste at an entity that got almost $10 million a year to manage the city’s reservoirs and water-treatment plant. The lawsuit, filed Nov. 6, drew heavily on a February 2014 report by the state comptroller’s office, which said that from 2008 to 2011, “the NWCDC recklessly and improperly spent millions of dollars of public funds with little or no oversight by either its board of trustees or the city.”

Energy Future Holdings Corp. took a major step forward Thursday in its drive to exit bankruptcy, when mutual fund company Fidelity Management & Research agreed to back the Dallas energy company’s chapter 11 plan, the Wall Street Journal reported today. A major holder of Energy Future debt, Fidelity will join the group attempting to buy Energy Future’s Oncor electricity transmissions business, Thomas Lauria, lawyer for advocates of the plan said at a hearing in the U.S. Bankruptcy Court in Wilmington, Del. The sale of Oncor is the centerpiece of Energy Future’s restructuring strategy. Money from the Oncor deal will be used to pay off some creditors. The opportunity to invest in a cash-producing, stable element of the Texas power infrastructure in a deal led by Hunt Consolidated Inc. has appeased other creditors. As described by Lauria, Fidelity is getting a little bit of both: cash from the buyout and a chance to invest in Oncor. The about-face by Fidelity, a former critic of Energy Future’s chapter 11 plan, could speed the end of a complicated and expensive bankruptcy proceeding.

A U.S. judge on Monday rejected a chapter 11 plan for Boomerang Tube, a pipe maker for the oil industry, in a bankruptcy that shed light on the aggressive tactics of its private equity owner and hedge fund lender, Reuters reported on Tuesday. The bankruptcy pitted the company's owner, billionaire Leonard Blavatnik's Access Industries, and hedge fund lender against its unsecured creditors, who attacked the strategies often used in debt restructurings. In a court filing, the unsecured creditors accused debt investor Black Diamond Capital Management of joining with Access Industries to use bankruptcy to grab control of the company and protect themselves from potential lawsuits. The unsecured creditors convinced Bankruptcy Judge Mary Walrath that Boomerang Tube was undervalued, priced at a historic trough in the oil industry that company serves. They argued that low valuation was used to justify paying them virtually nothing. Read more. 

For more information and insight into bankruptcy valuation, be sure to pick up a copy of ABI’s A Practical Guide to Bankruptcy Valuation. 

Caesars Entertainment Operating Co.'s (CEOC) bid to move forward with its restructuring is premature and unlikely as long as an investigation into major asset transfers remains unresolved, according to the casino company's creditors and the federal government, Dow Jones Daily Bankruptcy Review reported today. In court papers filed on Tuesday, several creditor groups and a Justice Department bankruptcy watchdog urged a judge to deny CEOC's request for a crucial court hearing on its disclosure statement — the document outlining its plan to slash some $10 billion of its $18 billion debt load — to be held by late January. "There is no plausible scenario in which these chapter 11 cases will be ready for a disclosure statement hearing in late January," wrote lawyers for unsecured creditors, who haven't backed CEOC's current restructuring plan. The objections cite an ongoing probe by a court-appointed examiner into various transfers of assets from Caesars to publicly traded parent Caesars Entertainment Corp., which isn't in bankruptcy.