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A deal to keep 1,740 RadioShack Corp. stores open hangs in the balance in a Delaware court after its top creditor, a losing bidder in an auction for the bankrupt retailer, called the process a "sham" and demanded a new sale, Reuters reported yesterday. RadioShack, which filed for bankruptcy last month, told a bankruptcy judge that it had selected the Standard General hedge fund as the winning bidder in the private four-day auction, which ended just before a court hearing yesterday. Standard General plans to operate most of the stores in conjunction with wireless phone company Sprint Corp. While RadioShack's attorney told the court the deal saved 7,500 jobs and was $23 million more than a bid by liquidators, the deal included less than $40 million in cash, according to court testimony. The hearing to approve the agreement quickly deteriorated into disputes among lenders over the complex agreements that governed the repayment among creditors. An attorney for Salus Capital Partners, which is owed $150 million and is RadioShack's largest creditor, blasted the auction process and demanded it be reopened. http://www.reuters.com/article/2015/03/26/radioshack-bankruptcy-idUSL2N0WS2O020150326

In related news, personal information gathered by RadioShack Corp. from shoppers is not included in its sale, the consumer privacy ombudsman in the electronics retailer's bankruptcy case said in response to concerns shared by several states that the data could be sold, Reuters reported. If that changes, Elise Frejka also said in a letter on Wednesday to Bankruptcy Judge Brendan L. Shannon that she would file a report with recommendations based on specific facts and circumstances. Her letter came as Oregon and Pennsylvania on Wednesday joined Texas and Tennessee in objecting to RadioShack selling names, email addresses and other personal information gathered from shoppers. Personally identifiable information of 117 million consumers could be made available in RadioShack's proposed sale, Oregon Attorney General Ellen Rosenblum said in a filing that urged stripping out information such as telephone numbers and mailing addresses from assets. In a separate filing, Pennsylvania Attorney General Kathleen Kane said that selling the information would violate parts of her state's Unfair Trade Practices and Consumer Protection Law. Texas Attorney General Ken Paxton last week objected to the sale of personally identifiable information and requested RadioShack's buyer be required to set a separate price for it. http://www.reuters.com/article/2015/03/26/idUSL2N0WS29H20150326

Bankruptcy Judge Robert Gerber told General Motors Co. six years ago it didn’t have to worry about lawsuits over cars made before its $49.5 billion government bailout, Bloomberg News reported yesterday. Last month, the same judge said he wasn’t so sure anymore. Judge Gerber expressed doubts about his decision, saying that it might allow GM to get away with alleged misconduct tied to an ignition switch defect in some cars. GM may have acted “very badly” in delaying recalls of cars it knew might be dangerous, Judge Gerber said at a hearing in New York Feb. 17. The judge said at the time that he’s deciding how to “fix” his 2009 ruling, and that he may take more than a month to do it. At least 74 people were killed when GM cars suddenly turned off after the ignition was jostled. More than 2.59 million vehicles have been recalled for just one type of switch defect. Affected car owners who weren’t injured sued Detroit-based GM, seeking compensation for their vehicles’ loss in value. If Judge Gerber rules bankruptcy doesn’t protect GM from such value claims for cars made before 2009, GM may face as much as $10 billion in potential liability over the scandal, plaintiff lawyers have said.

A lawyer who made his name as a Watergate prosecutor was approved yesterday to begin investigating a series of corporate deals in the lead-up to the bankruptcy of the casino operating unit of Caesars Entertainment Corp., Reuters reported yesterday. Creditors allege those deals looted billions of dollars from the operator of 38 casinos for the benefit of the parent company, which is not bankrupt, and its private equity backers, Apollo Global Management and TPG Capital. Richard Davis, a former partner at bankruptcy powerhouse Weil Gotshal & Manges, will investigative whether the operating unit received fair value for choice properties such as the Linq complex in Las Vegas. Davis was given a wide-ranging role by the judge who tasked him with investigating any apparent conflicts of interest by the bankrupt unit.

Unsecured creditors of MF Global Holdings' failed brokerage unit may soon receive $461 million in repayment, raising recoveries to 72 percent of claims lodged when it collapsed in 2011, the firm's trustee said yesterday, according to Reuters. Trustee James Giddens filed court papers seeking a bankruptcy judge's approval for the payout. Unsecured creditors received an initial $519 million distribution last year. Customers of the broker-dealer and other classes of creditors have received full payback of about $6.7 billion. MF Global Holdings, a commodities broker run by former Goldman Sachs co-chairman and New Jersey governor Jon Corzine, collapsed amid worries about Corzine's $6.3 billion bet on European sovereign debt, and the use of customer money to cover liquidity shortfalls. Its U.S. broker-dealer unit, MF Global Inc., also wound up in bankruptcy court, where Giddens was appointed to liquidate its estate and pay back customers and creditors.

As the 11-month mark of its chapter 11 filing approaches, Energy Future Holdings’ (EFH) campaign to get out of bankruptcy court probably remains at least another a year away, the Dallas Morning News reported yesterday. The creation of Energy Future Holdings — through the $45 billion buyout of the former TXU Corp. in 2007 — brought together some of the biggest names on Wall Street on a bet that electricity prices would rise. Almost a year after executives sought financial protection in the courts, there is little if any public indication progress has been made on determining how to divide the company’s assets, spread across subsidiaries Luminant, TXU Energy and Oncor. Negotiations are continuing between EFH and the various creditor groups, say attorneys in the case, who declined to comment publicly due to the sensitivity of the proceedings. But that process has been held up as interest spirals around the sale of power transmission company Oncor, which counts 10 million customers in Texas. When EFH filed for bankruptcy last April the plan was that Oncor would be taken over by a group of creditors aligned with Hunt Consolidated, the Dallas energy and real estate conglomerate run by billionaire Ray L. Hunt. But then NextEra Energy, a Florida-based power company with considerable assets in Texas, raised its hand with a bid later valued at $18 billion, and EFH had to scrap its restructuring plan. Now U.S. Bankruptcy Judge Christopher Sontchi has approved an auction process scheduled to conclude in August. With companies including Houston utility Centerpoint Energy and Warren Buffett’s Berkshire Hathaway reportedly having explored bids, some are speculating the sale price could reach $20 billion.

Bankrupt LightSquared, after three years of litigation with creditors, today will seek U.S. court approval of a mostly consensual plan to end its bankruptcy and repay in full its largest creditor, Dish Network Corp. Chairman Charles Ergen, Reuters reported today. LightSquared's bankruptcy is being closely watched because its main asset, wireless spectrum, is considered very valuable. Just how valuable it is, and what it can be used for, has been fiercely debated among stakeholders, and the bankruptcy will determine who ultimately controls it. LightSquared, the wireless venture owned by Phil Falcone's Harbinger Capital Partners, entered bankruptcy in May 2012 when the Federal Communications Commission revoked its spectrum license over concerns of GPS interference. Since then, there has been a parade of failed restructuring plans and litigation between the company and Ergen over the legality of his purchase of a huge chunk of LightSquared loan debt. However, LightSquared today will present a plan to give Ergen what he has long demanded: repayment of his $1 billion claim, in full, in cash, and with interest — a $1.5 billion tab.

Hedge fund Standard General has raised its bid to buy about 1,740 stores of bankrupt electronics retailer RadioShack Corp. in a court-supervised auction, which entered its second day yesterday, Reuters reported. Standard General, which would operate most of the stores in conjunction with Sprint Corp., increased its initial $145 million bid by at least $20 million, according to one of the sources. It also committed to keeping some 7,500 RadioShack jobs. Liquidators who proposed closing the stores and selling the inventory and fixtures also made a bid. The result of the private auction, taking place at the New York offices of the Jones Day law firm, must be approved by the U.S. Bankruptcy Court in Wilmington, Delaware. A hearing has been scheduled for Thursday at 9:30 a.m.

Bankrupt chemical company Freedom Industries pleaded guilty yesterday to three pollution charges related to last year's spill that contaminated a West Virginia river, The Associated Press reported yesterday. Mark Welch, chief restructuring officer of Freedom Industries, entered the plea on behalf of the company in federal court to negligent discharge of a pollutant and unlawful discharge of refuse matter, both misdemeanors, and violating a permit condition under the Clean Water Act, a felony. Thousands of gallons of a coal-cleaning agent from Freedom Industries in Charleston spilled into the Elk River and went into West Virginia American Water's intake 2 miles downstream on Jan. 9, 2014. It prompted a tap water ban for 300,000 residents in nine counties for up to 10 days while the water company's system was flushed out. Freedom Industries, which filed for bankruptcy eight days after the spill, faces a maximum $900,000 fine. Sentencing was set for June 29.