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A U.S. bankruptcy judge yesterday granted Energy Future Holdings Corp. more time to round up support for its chapter 11 plan, as creditors and potential bidders circle its valuable transmissions unit, Oncor, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Christopher Sontchi granted Energy Future's request to ward off the threat of competing chapter 11 plans until Oct. 29, the maximum time allowed by law. The decision means all offers for Oncor must go through Energy Future. Making the most of Oncor is Energy Future's chief hope to resolve the $42 billion debt load that pushed it into bankruptcy more than a year ago.

The trustee seeking money for Bernard Madoff's victims will receive $35.4 million in a settlement with two funds once run by Wall Street hedge fund manager J. Ezra Merkin, Reuters reported yesterday. According to settlement papers filed on Friday in bankruptcy court, the payment will be made by the Ariel Fund Ltd. and Gabriel Capital LP feeder funds, through their receiver Bart Schwartz. In exchange, the trustee Irving Picard will deem valid about $367.9 million of the funds' claims against the former Bernard L. Madoff Investment Securities LLC. Ariel and Gabriel Capital will be entitled to $179.5 million of "catch-up" distributions. The accord requires court approval, and the funds did not admit wrongdoing. Picard is still seeking an additional $280 million from Merkin, his Gabriel Capital Corp, and his Ascot Fund Ltd. and Ascot Partners LP feeder funds.

Former Dewey & LeBoeuf partner Jane Boisseau testified that the firm used her $621,000 in equity capital in 2010 to offset firm expenses in violation of the now-defunct firm’s partnership agreement, and also broke a written promise to repay a capital loan that the firm encouraged her to take, the American Lawyer reported on Friday. Boisseau also testified that neither she nor Dewey & LeBoeuf’s executive committee — a board composed of the firm’s most senior partners and a few rainmakers — were ever informed about the multimillion-dollar contracts guaranteeing future compensation for former executive director Stephen DiCarmine and ex-chief financial officer Joel Sanders. The six-year financial incentive agreements signed by Dewey & LeBoeuf chair Steven Davis in 2007, projected on a screen by assistant district attorney Peirce Moser, secured millions of dollars in income to DiCarmine and Sanders over the years and guaranteed them money even if the firm collapsed. Those contracts guaranteed DiCarmine $950,000 in base salary and Sanders $900,000 in base salary up to Dec. 31, 2013. The contracts also guaranteed an additional $200,000 to each defendant, plus bonuses depending on Dewey & LeBoeuf’s performance.

Seven years after Washington Mutual Inc. collapsed in the biggest U.S. bank failure, two of its former top executives are still looking for their “golden parachutes,” the Wall Street Journal reported today. Former Chief Operating Officer Stephen Rotella and David Schneider, former president of the home-loans unit, are among a group of about 70 former employees who say they are entitled to “golden parachute” payments, or compensation usually guaranteed to employees when a company is sold. The liquidating trust created in 2012 to chase down and distribute the company’s remaining assets is seeking a ruling in U.S. District Court in Washington, D.C., prohibiting such payments. The court may rule as soon as this week.

Caesars Entertainment Corp. may come under renewed pressure to make peace with creditors after losing a courtroom skirmish to bondholders seeking to collect a $750 million debt owed by the company’s bankrupt operating unit, Bloomberg News reported on Friday. The ruling on Thursday by U.S. District Judge Shira Scheindlin is the latest blow to the casino giant’s efforts to shield itself from responsibility for the debts of Caesars Entertainment Operating Co. That unit filed for creditor protection in January. The trustee for a group of the operating unit’s bondholders alleged that the parent improperly abandoned guarantees to honor the unit’s obligations, according to court documents. In a victory for the bondholders, Scheindlin said that the trustee can ask her to rule on parts of the case without first holding a trial or having the parties exchange more documents. The same judge refused to dismiss a similar claim in January.

The U.S. Department of Justice trustee monitoring Corinthian’s bankruptcy has formed a special committee representing the interests of hundreds of thousands of Corinthian students in negotiations with the school and its unsecured creditors, a group that includes the Department of Education, Bloomberg News reported yesterday. The students say Corinthian duped them into taking on federal loans, and they hope their newfound legal standing will give them leverage to push for debt relief, not only for themselves but for other Corinthian students. Troubles dogged Corinthian Colleges for years, with mounting allegations from state attorneys general and the Education Department that it falsified grades, attendance, and job-placement statistics in reports to regulators and in marketing materials. The Santa Ana, Calif.-based company, which has denied the allegations, in November agreed to sell about half its 107 campuses; on April 26, Corinthian said that it would close its remaining locations, at which about 16,000 students were enrolled. 

A former partner at Dewey & LeBoeuf LLP testified yesterday that the firm got caught in a never-ending debt cycle after the economic downturn, shedding light on how the once-august legal outfit spiraled into bankruptcy, the Wall Street Journal reported today. During testimony in a criminal trial against Dewey’s three former leaders, former high-level partner Jane Boisseau told a jury that once Dewey failed to meet its compensation targets in 2008, it started a system of borrowing from the next year to pay debts owed from the prior one. “The firm couldn’t afford to disappoint these major producers of business,” said Boisseau, explaining why the firm authorized the system of payments. Unable to make up its debts, Dewey filed for bankruptcy in May 2012.

A U.S. bankruptcy judge on Wednesday put on hold dozens of lawsuits accusing General Motors Co. of concealing an ignition-switch defect while the plaintiffs in those cases appeal an earlier ruling that found their cases were barred, Reuters reported yesterday. GM had argued that claims for vehicles predating its 2009 exit from chapter 11 bankruptcy should be dismissed, following Bankruptcy Judge Robert Gerber’s April 15 ruling that the company was shielded from those claims by the terms of its bankruptcy. Plaintiffs said that the cases should be stayed pending a resolution of their appeal. Judge Gerber said on Wednesday that it would be procedurally “cumbersome” to dismiss the cases, as GM requested, in case a higher court overturned his decision. Instead, the cases would be “simply stayed for the time being.” Gerber added that, if his decision was upheld, GM could renew its request.

The multimillion-dollar repercussions from Stockton University’s purchase of a defunct casino hotel in Atlantic City keep piling up, the Bergen County (N.J.) Record reported yesterday. Stockton University has spent nearly $3 million over the past five months — in addition to the $18 million purchase price — on the former Showboat, which it is now unable to convert to a satellite campus because of the deed restriction requiring that it remain a “first class casino.” The Showboat had closed its doors in August and was purchased by the university from Caesars Entertainment. The school made an agreement with Florida developer Glenn Straub — who bought The Revel, which is next door and closed in September — to sell the Showboat to him by July for $26 million. Meanwhile, Stockton has made a claim against Caesars Entertainment, seeking $22 million in damages for the Showboat deal. The purchase agreement specified that Caesars was responsible for resolving issues involving a deed restriction. Those issues were not resolved when Stockton purchased the property without clear title, and Caesars declared bankruptcy the following month.

The operating unit of Caesars Entertainment Corp received court approval yesterday to remain in control of its bankruptcy for another six months, Reuters reported yesterday. The ruling by Bankruptcy Judge Benjamin Goldgar allows the country's largest casino operator to pursue its plan for cutting its $18 billion debt without the threat of a rival plan from creditors. Judge Goldgar cited the size of the case in his decision, and he overruled creditors who pressed him to shorten the period of exclusive control to four months or even to end it now. Caesars will retain control of its bankruptcy through mid-November.