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Aereo Inc., the company behind a now-defunct TV-streaming service, won final court approval yesterday of a liquidation plan that will divvy up the proceeds from the sale of the company’s assets, the Wall Street Journal reported today. Bankruptcy Judge Sean Lane said that he would sign off on the plan following a brief hearing yesterday. Unsecured creditors, slated to receive about 10 percent of what they are owed, voted unanimously to support the proposal. Aereo effectively shut down a year ago following a landmark U.S. Supreme Court loss last June and sought chapter 11 protection in November. Under the liquidation plan, proceeds from the sale of the company’s assets are earmarked to pay a $950,000 settlement the company reached with broadcasters to put an end to litigation over the legality of Aereo’s business model.

Accounting firm Ernst & Young LLP again pressed its case for a quick victory in a suit by Lehman Brothers investors over Ernst's auditing of the investment bank before it failed, saying the there is no proof it made a false statement regarding Lehman, Dow Jones Daily Bankruptcy Review reported today. In a filing on Friday with U.S. District Court in Manhattan seeking an immediate win on the parts of the suit that remain, Ernst said that it would only be responsible for relying on Lehman's so-called Repo 105 accounting practices if it didn't believe what it said or knew it lacked a "reasonable basis" to say it. Read more.

The Obama administration said yesterday that it would forgive federal student loans owed by Americans who can show they were lured to colleges by fraudulent recruiting, a move that potentially could involve billions of dollars and is one of the most aggressive measures yet to ease student debt, the Wall Street Journal reported today. The move is designed first of all to help former students of Corinthian Colleges Inc., a big for-profit chain that collapsed into bankruptcy reorganization this spring. Federal officials accused the company in 2014 of lying to prospective students about its graduates’ job success. Among the most egregious allegations, officials accused Corinthian-owned schools of paying temp agencies to hire its graduates for as short a time as two days so they could count as employed. Officials said that under the emerging plan, the government will consider forgiving any loans made directly by the government — those held by the majority of the 43 million Americans with student debt — so long as the borrower can document a school persuaded him or her to take out the loan under conditions that would violate state laws. The Education Department plans to use a provision of a decades-old federal law that allows borrowers to have loans discharged if they can prove their schools broke a state law — such as by using false advertising or other deception — to lure them to apply and borrow funds.

Long before Triple Crown winner American Pharoah was born, he was almost repossessed, Bloomberg News reported on Saturday. This year’s Kentucky Derby, Preakness Stakes and Belmont Stakes winner came from a pair of racehorses whose unborn foals were collateral for a loan that went bad in 2010. By putting his stables into bankruptcy, owner Ahmed Zayat shielded the thoroughbreds from creditors, giving him the chance to keep the first horse since 1978 to win the premier U.S. horse racing series. Before it filed for bankruptcy in 2010, Zayat Stables LLC had run up more than $38 million in debts, mostly to Fifth Third Bank, which accused Zayat of trying to dodge a requirement that he personally repay a loan if his company couldn’t. He also owed a thoroughbred auction house, Keeneland Association Inc., almost $2.4 million for horses, according to bankruptcy court papers. In the run-up to the stables’ February 2010 bankruptcy filing, Zayat traded allegations of unfair business dealings and improper conduct with his creditors. The chapter 11 case temporarily halted Fifth Third Bank’s effort to repossess $37 million worth of horses, including American Pharoah’s parents, Pioneerof the Nile and Littleprincessemma.

Class action lawyers suing General Motors Co. over its fatal ignition-switch problems have lined up several of the automaker’s top lawyers and ex-lawyers for questioning over the next few months, including former general counsel Michael Millikin and outside counsel Anton Valukas, Corporate Counsel reported today. Texas attorney Bob Hilliard, co-lead attorney in the multidistrict class action against GM, has prepared a list of 55 people to be deposed. Millikin, who was replaced as general counsel on March 1 and is set to retire in July, is scheduled for questioning on Aug. 26. He has denied any wrongdoing in the delayed recall of 2.6 million vehicles with faulty ignition switches that have been blamed for 109 deaths and more than 200 injuries. A GM internal investigation prepared by outside counsel Anton Valukas, of Jenner & Block, essentially blamed incompetence and poor communications for the nearly decade-long delay. Valukas is scheduled to be deposed Sept. 24.

Tumbling oil prices have helped put asset-based senior lenders in the driver’s seat when it comes to restructuring distressed energy companies, Bloomberg News reported on Friday. A slew of energy bonds have lost value as crude tumbled 44 percent in the past year. Since senior lenders are most likely the first creditors that would see losses on the debt, that has given them a leading role in driving the bankruptcy process to potentially own the distressed businesses, said panelists at the 31st Annual Bankruptcy & Restructuring Conference of the Association of Insolvency and Restructuring Advisors in Philadelphia on Friday. “We are seeing many asset-based loans are bigger than the value of the assets,” said Jonathan M. Landers, a restructuring attorney at New York-based Scarola Malone & Zubatov LLP. “That gives a secured lender a much better shot to drive the restructuring process, because the junior creditors don’t really have practical interest anymore.”

Barclays Plc on Friday settled a long-running lawsuit by the trustee liquidating Lehman Brothers Holdings Inc.’s brokerage unit, which arose from the bank's purchase of much of that unit at the height of the 2008 global financial crisis, Reuters reported. Trustee James Giddens said that the unit, Lehman Brothers Inc., will pay Barclays about $1.28 billion, largely representing the value of margin assets not previously paid to the British bank, plus interest. As a result, Barclays said that it will have recouped all but $80 million still in dispute, plus $255 million tied to derivative investments that it expects to receive from third parties. The settlement would end six years of litigation by Giddens to recoup various assets he said totaled more than $7.6 billion.

Caesars Entertainment Operating Co.’s restructuring chief said yesterday that he thinks the company has “set the table” for a successful reorganization, but lawsuits against the casino giant’s parent could hamper the progress made in the company’s bankruptcy case, the Wall Street Journal reported today. Testifying at day two of a trial to decide whether lawsuits filed against CEOC’s non-bankrupt parent, Caesars Entertainment Corp., can move forward, Randall S. Eisenberg said the market would gain confidence if it knew CEC wasn’t potentially on the hook — at least immediately — for billions of dollars related to prebankruptcy asset transfers between itself and CEOC. A $1.5 billion contribution by CEC is a lynchpin of CEOC’s current restructuring plan, and it wouldn’t have that money if it lost the suits, both Caesars entities have said. Read more. (Subscription required.) 

In related news, prepetition lender Salus Capital Partners LLC wants to convert the bankruptcy case of RadioShack Corp. to chapter 7 to preserve any remaining value of the estate, The Deal reported today. Salus on June 2 filed a motion in the U.S. Bankruptcy Court for the District of Delaware in Wilmington to convert the proceedings from chapter 11, asserting the company no longer has a viable business to reorganize. Salus also said there is no advantage to liquidating the debtor's remaining assets, which primarily consist of potential litigation claims, in chapter 11. Bankruptcy Judge Brendan Linehan Shannon has scheduled a hearing on the motion for June 25. Read more.

The legal fight between a California strawberry grower and the middleman that gets its berries to Trader Joe’s and other grocery stores is getting contentious, the Wall Street Journal reported today. Lawyers for the Santa Cruz Berry Farming Co. want a bankruptcy judge to punish the middleman, an Illinois firm called Tom Lange Co., for missing a May 28 deadline to pay $140,544. That’s how much Santa Cruz Berry said that it is owed for 10,927 boxes of berries shipped between May 17 and May 23. Santa Cruz Berry officials said they need the money to pay workers — payroll can swell to 300 people during the busiest times — to pick berries on 200 acres of land used by the Watsonville, Calif.-based farm. Owner Fritz Koontz said in court papers that, since it’s early in the harvest season, the farm doesn’t have much cash stored up.