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A ruling on once-forgotten subordinated debt issued by Lehman Brothers before its collapse could yield a huge payday for Deutsche Bank AG and other distressed-debt investors, Bloomberg News reported. Holders of subordinated notes issued out of one of Lehman’s European subsidiaries known as “enhanced capital advantaged preferred securities,” or ECAPS, must be paid before other claims are satisfied, judges in London’s Court of Appeal said in a judgment on Wednesday. The ruling could still be subject to yet another appeal at the U.K. Supreme court. Deutsche Bank is the largest holder of ECAPS notes, and led part of the appeal. Other holders include Barclays Plc, Farallon Capital Management and CarVal Investors. In an earlier court case, a judge ruled that investors should share 13.7% of whatever was left after paying higher-ranking creditors, with the rest going to Lehman Brothers Holdings Inc., or LBHI, the ultimate U.S. parent of the collapsed broker-dealer. Wednesday’s ruling will see ECAPS holders take priority over the LBHI claims. “LBHI intends to seek permission to appeal the U.K. Judgment to The Supreme Court of the United Kingdom,” a lawyer for the bankrupt lender said in a filing on Wednesday. King Street Capital Management and Elliott Management teamed up with LBHI to form a joint venture called the Wentworth Group that would share claims based on loans that the U.S. parent made to its European subsidiary. King Street is also a large ECAPS holder and will likely receive a share of the pot either through the notes or the LBHI venture.

Satellite operator Intelsat SA may delay its reorganization plan confirmation hearing by about a month, which could push back the date it eventually exits from bankruptcy, Reuters reported. Bankruptcy Judge Keith Phillips in Richmond, Va., said during a virtual hearing on Wednesday that he has "serious concerns about whether this can be accomplished in four days,” alluding to the extensive evidence and testimony the company expects to go through as it battles opponents during the plan hearing. Lawyers for the company and its various creditor groups said they would discuss the judge's suggested postponement of the hearing from the current Nov. 8 start date to Dec. 2. Approval of the plan is key to Intelsat’s ability to wrap up its bankruptcy, which has been ongoing since May 2020. Intelsat is pursuing a plan that would cut its debt from $15 billion to $7 billion and hand control of the company over to unsecured bondholders of subsidiary Intelsat Jackson Holdings SA. The plan has substantial support among creditors, but some opposition remains from another group of bondholders, a small group of equityholders and rival satellite company SES Americom. Intelsat filed for bankruptcy to restructure its debt as it prepared to transfer some of its C-band spectrum to the U.S. Federal Communications Commission. In exchange, Intelsat is receiving about $4.9 billion from the FCC. The current agreement with bondholders requires an order approving the plan to be entered by Dec. 22. The case is In re Intelsat SA, U.S. Bankruptcy Court, Eastern District of Virginia, No. 20-32299.

Johnson & Johnson used the lenient venue-selection rules of U.S. bankruptcy law to push tens of thousands of talc-related cancer claims to its bankruptcy court of choice, roughly 600 miles south of the company’s New Jersey headquarters, the Wall Street Journal reported. The New Brunswick, N.J consumer goods giant follows other companies and nonprofits that have filed chapter 11 cases in venues far from their headquarters to weather lawsuits over harmful products or other alleged wrongdoing. J&J formed a new Texas subsidiary to carry its talc liabilities, then converted that entity to a North Carolina-based company days before it filed for bankruptcy. The chapter 11 filing last week effectively shifts to the U.S. Bankruptcy Court in Charlotte, N.C., the fate of nearly 40,000 pending lawsuits alleging talc used in Johnson’s Baby Powder caused ovarian cancer, asbestos poisoning and other illnesses. “Further manipulation of the venue statute by creating entities for the sole purpose of filing in a particular jurisdiction does push this to an extreme that is likely to undermine faith in the bankruptcy system,” said Prof. Stephen Lubben of Seton Hall University School of Law. Congress is considering making forum selection rules more restrictive. The rules have long been flexible in allowing companies their preferred location for filing for bankruptcy protection. Sens. Elizabeth Warren (D-Mass.) and John Cornyn (R-Texas) reintroduced legislation last month that would require corporations or wealthy individuals to file chapter 11 either in their home state or where they have significant assets. Congressional Democrats criticized J&J’s decision to put its talc claims into chapter 11, describing it as an abuse of the bankruptcy system. J&J has said bankruptcy provides a forum to fairly compensate claimants, and likely quicker than through the traditional trial system. The company has defeated some lawsuits, lost others and maintained that its baby powder is safe.

A bankruptcy judge agreed to take up a challenge by Brazos Electric Power Cooperative Inc. seeking to reduce the nearly $1.9 billion it was billed by Texas’ power-grid operator during a freak winter storm in February, sweeping aside opposition by state power regulators, WSJ Pro Bankruptcy reported. Bankruptcy Judge David Jones in Houston said that he would consider the dispute, which pits the largest power cooperative in the state against the grid operator, the Electric Reliability Council of Texas (ERCOT). The judge said at a hearing yesterday that bankruptcy court, not the state-court system, was the appropriate venue to decide how much Brazos owes. Lawyers representing Ercot’s regulator, the Public Utility Commission of Texas, had urged the judge not to hear the lawsuit. Brazos filed for bankruptcy in March after receiving billions of dollars in bills from ERCOT for a week in February when winter storm Uri knocked power plants offline and left millions of customers without electricity for days. The bills were that high because ERCOT’s electricity rates had risen to the maximum of $9,000 per megawatt hour during the storm, compared with an average of roughly $22 per megawatt hour last year.

Grupo Aeromexico, which operates Mexico's largest airline, reported on Tuesday a net loss of 2.24 billion pesos ($108.7 million) in the third quarter, versus a net loss of 2.88 billion pesos from the same period last year, Reuters reported. Aeromexico, which has been undergoing a reorganization under chapter 11 of the Bankruptcy Code in the U.S., posted 13.23 billion pesos in revenue for the third quarter, up from 4.67 billion a year earlier. The airline said that its total capacity, as measured in available seat kilometers (ASKs), increased 24.8% compared to the second quarter of 2021, driven by the recovery of 35.4% in capacity assigned to the international market and 11.6% to the domestic market.

The creators of “South Park” are facing competition to buy Casa Bonita, the bankrupt restaurant and family entertainment center outside Denver that was featured in an episode of the TV show, WSJ Pro Bankruptcy reported. Andrew Novick, a Casa Bonita enthusiast who leads a group called Save Casa Bonita LLC, said in court papers Monday that he can do better than the proposed sale to “South Park” creators Trey Parker and Matt Stone. A lawyer representing Parker and Stone in the bankruptcy case declined to comment. Their sale offer, announced on a live-streamed conversation in August with Colorado’s governor, Jared Polis, values Casa Bonita at $3.1 million, court papers show. Any sale requires approval from the judge overseeing Casa Bonita’s chapter 11 case in the U.S. Bankruptcy Court in Denver. Novick said his group is willing to put up $3.5 million for Casa Bonita, a Mexican resort-themed restaurant known for its 30-foot high waterfall, which cliff divers, at times wearing gorilla suits, regularly jump off to entertain guests.

Brazos Electric Power Cooperative Inc. yesterday largely defeated an effort by the Texas electric operator to dodge a lawsuit over a $2 billion energy bill stemming from the state's historic February storm that knocked out power for millions, Reuters reported. Bankruptcy Judge David Jones in Houston rejected arguments from the Electric Reliability Council of Texas (ERCOT) and Public Utilities Commission of Texas (PUCT) that the dispute should not be handled in bankruptcy court and that allowing it to continue would infringe upon the state’s sovereignty. ERCOT said in a response to a request for comment that it does not comment on pending litigation. Brazos, the largest and oldest electric co-op in Texas, filed for chapter 11 protection in March after it was hit with the massive bill. The bill for the seven days the storm lasted is nearly three times the co-op’s total power cost from 2020, which was $774 million, according to court papers. For several days during the storm, ERCOT set electricity prices at $9,000 per megawatt hour. In August, the co-op filed a complaint within its bankruptcy aiming to reject ERCOT's claim for the payment of the bill and substantially reduce the amount. It argues that the charges are constructively fraudulent and excessive. The Public Utilities Commission of Texas says Brazos is trying to re-price the market. Ruling in favor of the coop, Texas Assistant Attorney General Jason Binford argued at yesterday's hearing, could create a precedent that would lead to other electric providers seeking bankruptcy to offload their energy bills as well. Additionally, Binford said, Texas has a specific procedure for resolving this type of dispute. Handling the bill in bankruptcy court infringes upon the state’s sovereign immunity, he argued.

Derivatives Lehman Brothers purchased to guard against defaults on the subprime-mortgage bonds that fueled the 2008 crisis could deliver a big pay-out more than 10 years after the bank’s collapse, Bloomberg News reported. Lehman Brothers International Europe, or LBIE, a London-based subsidiary of the defunct bank, is taking bond-insurance firm Assured Guaranty Ltd. to court over decade-old claims that a swath of credit-default swaps it had bought were incorrectly settled in 2009. A trial to resolve the matter started in New York state court on Monday, with Justice Melissa Crane presiding over a virtual hearing. LBIE claims it’s owed more than $500 million because Assured failed to use market prices when it closed out a series of swaps, tallying them up instead through a method its lawyer said defied “the laws of financial physics” in court on Monday. Assured relied on stale data, flouted market norms and acted in bad faith when it settled the trades, Andrew J. Rossman of Quinn Emanuel Urquhart & Sullivan in New York said on behalf of LBIE. For its part, Assured says it followed the contracts to the letter when settling them, and the results show that it was actually Lehman on the hook — owing the bond insurer a $20.7 million termination fee after the bank folded. Rather than a head-spinning skirmish over obscure financial instruments, “at its core, it’s a simple contract dispute, and a simple case,” Lev Dassin of Cleary Gottlieb Steen & Hamilton said on behalf of Assured.

Jessica Simpson is back helming her billion-dollar brand, FoxBusiness.com reported. The singer and actress, 41, is once again in charge of her popular Jessica Simpson Collection after its parent company, Sequential Brands Group Inc., filed for chapter 11 protection back in August. Since the filing, Simpson and her mother, Tina Simpson, have been hard at work behinds the scenes getting the actress and singer her company back as she only owned just over a third of the brand – 37.5% – at the time Sequential Brands Group Inc. purchased a majority share from Camuto Group in 2015. The brand is comprised of over 30 product categories, according to Forbes. In 2014, the outlet also noted that the brand brings in about $1 billion per year at retail.