%1

There's a legal challenge to the Jefferson County (Ala.) bankruptcy deal, and the county is set to go before the U.S. Court of Appeals for the Eleventh Circuit later this year, WBRC.com reported on Friday. The hearing is related to a lawsuit filed by sewer customers, who want to see the county's bankruptcy exit plan unraveled. On Thursday, the court said that it will consider the county's appeal of a district court ruling denying the county's motion to dismiss the lawsuit as moot. Jefferson County is expected to file briefs by June 1. Attorneys for the sewer customers will then likely file a response. The Eleventh Circuit could hear arguments for the case by the end of 2015.

The lack of enough creditors owed enough money could end up blocking Bill Gates from using chapter 11 to reacquire two remaining power plants of which he’s already the secured lender and owner, as a consequence of a technical provision in the Bankruptcy Code, Bloomberg News reported yesterday. Gates’s Optim Energy LLC, once the owner of three electric power plants, has plenty of debt, but mostly to Gates-owned Cascade Investment LLC, a secured creditor still owed $596.5 million following the sale of one of the three plants. The problem for Gates, co-founder of Microsoft Corp., is that Optim doesn’t have enough creditors, because the main one aside from Cascade is a former coal supplier now owned by an affiliate of Blackstone Energy Partners LP that’s adamantly opposed to the plan.

After a two-week blackout at Atlantic City's Revel Casino, a power supplier has agreed to turn the lights back on at the failed gambling resort under a temporary deal reached in court with its new owner, Reuters reported yesterday. With a hearing scheduled for Monday to reconsider a temporary restraining order to block owner Glenn Straub from using generators, ACR Energy Partners agreed to supply enough electricity to run a fire control system for two weeks. The deal with Straub's company, Polo North, will allow the two sides more time to find the long-term resolution to their dispute. The parties have agreed to a mediation if negotiations break down. ACR, formed to supply the Revel complex with electricity when it opened in 2012, has said that it would shut off power until Straub agreed to abide by a 30-year supply agreement it had with the Revel's former owners, and pay the hefty bills they accrued. Straub, a Florida developer who specializes in buying distressed properties, paid $82 million for the gleaming, $2.4 billion high-rise casino-hotel earlier this year. To sidestep ACR, Straub sought to hook up generators, but on Friday, U.S. District Judge Jerome B. Simandle issued a temporary restraining order barring any such move, citing the potential danger of using outside equipment.

A federal judge denied Lehman Brothers Inc.’s bid to carve out $1.3 billion from an earlier court decision that awarded $4 billion in disputed assets to Barclays PLC stemming from the U.K. bank’s purchase of Lehman’s brokerage business, the Wall Street Journal reported today. U.S. District Judge Katherine B. Forrest said on Wednesday that Barclays was entitled to all of the so-called margin assets — some billions of dollars in cash and collateral — securing derivatives positions. The ruling is a win for Barclays, which purchased Lehman’s brokerage business days after Lehman’s 2008 collapse. The legal fight over the sale began in 2009, when Lehman sued Barclays saying the British bank negotiated a secret discount when it bought Lehman’s brokerage. A bankruptcy judge concluded that Barclays didn’t receive an improper “windfall” from the sale, but that Lehman’s brokerage was entitled to the approximately $4 billion in margin assets. Both sides appealed, and the district court ruled that Barclays was entitled to both groups of assets. James W. Giddens, the trustee winding down Lehman’s brokerage, appealed to the Second U.S. Circuit Court of Appeals, which last year affirmed the district court ruling.

Creditors of the bankrupt operating unit of Caesars Entertainment Corp. said that they wanted to stop the casino company from extending the period when it has exclusive control of its chapter 11 reorganization so other plans could be proposed, Reuters reported yesterday. The creditors filed objections on Wednesday to the request by the operating unit to extend to Nov. 15 from May 15 its exclusive right to propose a plan to cut its $18 billion in debt. The operating unit filed for bankruptcy in January, and creditors rarely oppose a company extending exclusive control so early in the case. Among those objecting were the company's lone allies, a group known as the first-lien noteholders who preferred an extension to September.

A bankruptcy judge yesterday put the brakes on Optim Energy LLC 's plan to exit bankruptcy through the sale of its two Texas power plants after a unit of private equity company Blackstone Group LP objected to the deal, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Brendan Linehan Shannon of the U.S. said that he would hold off on ruling on Optim's plan disclosure statement, which describes the company's plan to exit bankruptcy protection by selling two Texas power plants, until early next month.

Bankrupt ex-billionaire Samuel Wyly told a judge it’s too soon for regulators to fret over what he’ll do with as much as $50 million from the planned sale of his family’s Colorado ranch, the site of six custom-built mansions, Bloomberg News reported yesterday. The U.S. Securities and Exchange Commission and the Internal Revenue Service, which seek more than $2 billion from Wyly, have objected to his proposal, arguing he hasn’t guaranteed the proceeds won’t disappear offshore. Wyly, who helped build companies including arts-and-crafts retailer Michaels Stores Inc. before running afoul of the SEC, has said he has about a 1 percent stake in the ranch, with the rest owned by a trust on the Isle of Man. Wyly said in a bankruptcy court filing on Tuesday that the plan should be approved because the details of any sale agreement, including the treatment of the proceeds, would need additional court approval anyway. “No one on the debtor’s team is going to sit by idly if any dissipation of estate assets were to be threatened,” Wyly’s lawyer, Josiah Daniel, said in the filing.

A former Dewey & LeBoeuf partner who filed for chapter 7 bankruptcy in November now faces claims by JP Morgan Chase that he lied last year when he sought more time to pay back a $500,000 loan he had taken out in 2012, the American Lawyer reported today. The bank alleges in a complaint filed on Monday in the U.S. Bankruptcy Court in Connecticut that John Altorelli — now co-chair of DLA Piper’s finance practice in the U.S. — misrepresented the value of his assets in an effort to convince JP Morgan Chase to extend his loan. JP Morgan Chase is asking the bankruptcy court to declare the loan to Altorelli nondischargeable. Altorelli left Dewey in April of 2012, just one month before the firm filed for chapter 11 bankruptcy. Three of the firm’s former leaders — chairman Steven Davis, executive director Stephen DiCarmine and CFO Joel Sanders — currently face criminal charges of alleged accounting fraud brought by Manhattan District Attorney Cyrus Vance.

Lehman Brothers yesterday said that former top trader Jonathan Hoffman is seeking “double recovery” on his bonus from 2008, in day one of a trial over whether Lehman owes Mr. Hoffman and three other employees millions in back bonuses, the Wall Street Journal reported today. Hoffman, a former global rates trader who at the time of Lehman’s collapse was the bank’s third-highest paid rank-and-file employee, was paid an $84 million bonus by Barclays PLC, which bought Lehman’s brokerage in the days after the investment bank filed for bankruptcy, Lehman says. A lawyer for Hoffman argued in court that it doesn’t matter that Barclays paid him a bonus. Since the bonus agreement with Barclays was separate from Hoffman’s Lehman contract, the lawyer said, the Lehman estate still owes him $84 million for his work for 2008.

BlueMountain Capital Management LLC and Halcyon Asset Management LLC will suffer losses if Energy Future Holdings Corp. fails to pay them a $431 million premium on their notes, even after the hedge funds get back all the money they lent the power company, portfolio managers testified, Bloomberg News reported yesterday. John Greene of Halcyon and Ethan Auerbach of BlueMountain were in bankruptcy court yesterday to fight Energy Future’s decision to refinance the senior notes last year without also paying the $431 million premium. Such payments are sometimes made to compensate lenders for lost interest when a borrower redeems a debt early. The Energy Future unit that repaid about $4 billion in notes is profitable and solvent, unlike the rest of the company. That’s why Halcyon paid about 107 cents on the dollar for at least $100 million in Energy Future senior notes last year, Greene, the director of research at the hedge fund, told U.S. Bankruptcy Judge Christopher Sontchi.