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Robert Keach, the court-appointed trustee winding down Montreal Maine & Atlantic Railway Ltd., is suing Wheeling & Lake Erie Railway Co. to claw back millions of dollars paid to a company insider, Dow Jones Daily Bankruptcy Review reported today. Keach is seeking $2.7 million plus interest that went to Wheeling from the 2011 sale of MM&A rail lines to the state of Maine for $21 million. In a suit filed in bankruptcy court on Tuesday, lawyers for Keach said that the $2.7 million went to Wheeling, whose chief executive was Larry R. Parsons. Parsons was also a director of MM&A and Wheeling was one of MM&A's biggest lenders.

The Roman Catholic Diocese of Gallup, N.M., which stretches across 55,000 square miles of northern Arizona and New Mexico, is seeking to sell 55 parcels of mostly vacant desert land to help fund a settlement with about 60 alleged victims of clergy sexual abuse, the Wall Street Journal reported today. The diocese in a court filing last week asked Bankruptcy Judge David Thuma for permission to hire two real-estate brokers and to move forward with an auction process for the properties. The auction will be held 50 to 60 days after the judge signs off on the request, according to court papers.

Jurors in a New York state court heard vastly different characterizations yesterday of the alleged roles of three former executives who are facing criminal fraud charges related to the 2012 collapse of Dewey & LeBoeuf, the American Lawyer reported today. In the first day of what is expected to be a four-to-six-month trial, prosecutors portrayed the three defendants — former firm chair Steven Davis, onetime executive director Stephen DiCarmine and ex-chief financial officer Joel Sanders — as “[directing] a fraudulent scheme” that deceived Dewey & LeBeouf’s lenders and investors into thinking that the firm’s financial performance was healthier than it was. But defense counsel, in their own opening statements, pinned the blame for the accounting misconduct on their three clients’ subordinates. They also asserted that the firm's demise was triggered not by accounting fraud but by the recession and departure of key rainmakers in 2011 and 2012, as well as publicity surrounding a probe of the now-defunct firm by the New York County District Attorney’s Office.

The trustee recovering funds for investors cheated by Bernard Madoff is urging a judge not to dismiss his suit against an accounting firm that had close ties to Madoff, saying that its principals were a "crucial part of the machinery" that kept the Ponzi scheme going, Dow Jones Daily Bankruptcy Review reported today. Lawyers for trustee Irving Picard said in a court filing on Thursday that former Madoff principal Frank Avellino and partner Michael S. Bienes ran the first feeder funds that pooled investor cash and funneled the money to Madoff. Picard's 13-count amended complaint, filed in November, seeks a total of about $900 million from Mr. Avellino, Bienes, and their wives and other relatives and related entities. Most of the charges are for the transfers of money Picard says the parties received. Picard said that Avellino started investing with Madoff as far back as 1962. In the Thursday filing urging against dismissal of the complaint, Picard's lawyers said, "Avellino and Bienes were not innocent victims of Madoff's fraud. Instead, they had actual knowledge of the fraud and actively assisted Madoff in concealing it from government regulators who were closing in on the truth."

Nearly three years after the demise of law firm Dewey & LeBoeuf, three of its former top executives will go on trial on charges they cooked the books in an attempt to stave off the largest law firm collapse in U.S. history, Reuters reported today. Opening statements are expected to begin today in Manhattan state court in the criminal case against former Dewey & LeBoeuf chairman Steven Davis; ex-executive director Stephen DiCarmine, and ex-chief financial official Joel Sanders. The men face grand larceny, falsifying business records and other charges. They have pleaded not guilty.

MF Global Holdings Ltd. investors are seeking final approval of a $74 million settlement stemming from their lawsuit against several well-known financial institutions, Dow Jones Daily Bankruptcy Review reported today. In a Friday filing with U.S. District Court in Manhattan, lawyers for the plaintiffs urged a judge to approve the settlement, calling it "very favorable in light of the risks of continued litigation." The institutions, including units of Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc., served as underwriters for the sale of MF Global's stocks and bonds before its collapse. The deal, which has already received preliminary approval, "dismisses and releases" all claims against them. The investors, now led by Virginia Retirement System, sued the financial institutions as part of a larger 2011 suit against former MF Global Chief Executive Jon S. Corzine and other company executives, accusing the parties of not disclosing the risks associated with MF Global's European sovereign debt trades using repurchase-to-maturity transactions.

Timing is everything for creditors appealing the start date of the bankruptcy filing for Caesars Entertainment Corp.’s operating company in hopes of unlocking $468 million in value, Reuters reported yesterday. Caesars' unsecured creditors' committee yesterday asked a federal judge to review an April 29 ruling that Caesars is not obligated to consent to a forced bankruptcy case filed by creditors on Jan. 12. Caesars voluntarily filed for chapter 11 protection three days later, on Jan. 15. The unsecured creditors separately asked Bankruptcy Judge Benjamin Goldgar to force Caesars to consent to the Jan. 12 case because they say Caesars might have cost them money by waiting. Caesars in October granted certain stakeholders a lien on as much as $468 million in cash to earn their support for its proposed restructuring. It waited until Jan. 15 to file for bankruptcy so the lien would be outside a statutory 90-day window to challenge certain pre-bankruptcy payments, the unsecured creditors argue. The unsecured creditors want to bring the case back within that window by enforcing the Jan. 12 filing, as invalidating the lien would free up the money for other creditors.

The Federal Trade Commission (FTC) is urging the courts to secure tens of millions of consumers’ personal data as RadioShack goes through bankruptcy, The Hill reported yesterday. The FTC yesterday recommended that Standard General, which purchased the electronics retailer, be bound to the terms that were in place when consumers initially handed over their data. After RadioShack filed for bankruptcy earlier this year, it put up a number of assets up for auction, including lists of names, home addresses, email addresses and purchase histories. Standard General was the top bidder for the assets, which included 1,743 RadioShack stores in addition to the company’s trove of consumer data. Approval from a bankruptcy court is required to finalize the deal, and a hearing is set for later this week.

San Bernardino's council yesterday approved a bankruptcy exit plan that seeks to virtually eliminate the southern California city's pension bond debt while paying Calpers, the state pension system, in full, Reuters reported today. The city council voted 6-1 for the plan after a debate which included input from residents. The bankruptcy blueprint, called a plan of adjustment, must now be presented to the federal judge overseeing the city's bankruptcy by May 30, under a court-imposed deadline. Under the plan, city officials want to slash their $50 million pension debt to just a penny on the dollar. The city previously agreed to pay CalPERS, its biggest creditor, in full now and at all times in the future, an agreement incorporated into the plan.

A judge on Friday granted preliminary approval to a bankruptcy plan that sets the stage for the final days of US Investigations Services, Dow Jones Daily Bankruptcy Review reported today. Also known as USIS, the company vetted Edward Snowden for his National Security Agency contract work, and it conducted the background check on Aaron Alexis, who was working for a government subcontractor when he killed 12 people in a shooting rampage at the Washington Navy Yard in September 2013. Last summer, USIS was hit with a cyberattack that exposed the personnel files of Department of Homeland Security employees to hackers. Owned by Providence Equity Partners, USIS lost its federal government contracts and is shutting down. Friday, Judge Laurie Selber Silverstein cleared the way for creditors to vote on the bankruptcy exit plan proposed for USIS.