%1

Sears Canada Inc. creditors are targeting Eddie Lampert, its former controlling shareholder and the chief executive of its U.S. namesake Sears Holdings Corp., over payments he received before the Canadian business collapsed last year, WSJ Pro Bankruptcy reported. A group of unhappy pensioners served court papers on Friday in Ontario’s Superior Court of Justice asking for the appointment of a trustee in Sears Canada’s bankruptcy proceeding for the purpose of digging up additional funds for creditors. The proposed trustee would scrutinize nearly $3 billion in shareholder dividends paid out since 2005, of which Lampert and his hedge fund ESL Investments Inc. were “major beneficiaries,” according to the papers.

Chief Bankruptcy Judge Robert H. Jacobvitz of Albuquerque, N.M., awarded three other former patients another $10 million in damages, after finding that Quorum Health Resources of Tennessee breached its duty to prevent harm to patients at Gerald Champion Regional Hospital in Alamogordo from 2007 to 2008, the Albuquerque Journal reported. The damage assessment against Quorum, which supplied top executives for the hospital, is the first time in the protracted litigation that a judge has determined the amount of harm suffered by individual plaintiffs. Patient malpractice and negligence claims, which grew to nearly 80 over the years, forced the hospital to seek bankruptcy court protection in 2011. A partial settlement involving the physicians, Christian Schlicht and Frank Bryant, and the hospital totalled more than $33 million. But for years, Quorum resisted settling the cases. In late 2016, Jacobvitz determined that the hospital management firm was 16.5 percent culpable for its negligence. Last summer, the judge held a trial to assess damages, beginning with four of the former patients. Quorum attorneys argued that their pain, numbness, weakness and other debilitating symptoms were the result of prior back problems — not the bone cement injections. But Jacobvitz, in his ruling on Jan. 30, concluded that the pre-existing conditions were aggravated by the harmful cement treatments and that the four were entitled to damages that reflected the extent of the aggravation.

An Austrian hedge fund that helped direct investments from abroad into Bernard Madoff’s Ponzi scheme agreed to pay $76.5 million to victims of the fraud in a settlement with the trustee who is unwinding the con man’s firm, Bloomberg News reported. Trustee Irving Picard said yesterday that he reached the deal with Alpha Prime Fund Ltd., which is domiciled in Bermuda and managed in Austria. The settlement brings the total recovered by Picard to $12.8 billion. More than $10 billion has been distributed to victims of Madoff’s fraud, while some money has been set aside pending resolution of lawsuits by victims seeking more cash than the trustee says they’re entitled to.

A federal judge yesterday granted a motion allowing two claims of sexual abuse by an Absarokee, Mont., priest in the 1970s and '80s to proceed to conclusion through the state courts, the Great Falls Tribune reported. The order by U.S. Bankruptcy Judge Jim Papas allows two claims to move forward in district court, which was not previously an option after the Great Falls-Billings Diocese filed for chapter 11 bankruptcy last year to move toward a settlement for the 86 people who have filed claims of sexual, physical and emotional abuse. Most claim the abuse took place in their youths at the hands of eastern Montana clergy from 1940s to the 1990s. Attorneys for the victims argued in January that while settlement negotiations are not moving forward, processing two claims at the state court level would provide more insight when working toward a settlement for the remaining 84 victims. The district court case will likely decide whether or not the diocese was negligent in these instances of abuse, as alleged by attorneys for the victims.

Firearms maker Remington Outdoor Co., facing “difficult industry conditions” and a school-shooting lawsuit, plans to file for bankruptcy after reaching a debt-restructuring agreement with its lenders and bondholders, WSJ Pro Bankruptcy reported. The company, whose many gun brands include Bushmaster as well as its namesake Remington, plans to slash about $700 million in debt from its balance sheet through a debt-for-equity swap with its term loan lenders and holders of its 7.875 percent senior secured notes. The restructuring will be carried out through a chapter 11 filing in the U.S. Bankruptcy Court in Wilmington, Del., the company said yesterday. While under chapter 11 protection, Remington plans to continue its operations and continue paying its vendors and employees. Remington said yesterday that creditors have agreed to provide a $100 million loan to help fund operations while the company is in bankruptcy. The loan will be converted into an exit term loan when the company emerges from bankruptcy, pending court approval. Remington’s lenders and noteholders have also agreed to provide a $45 million term loan that will be rolled into the bankruptcy loan.

U.S. oil and gas producer Breitburn Energy Partners LP, which has been in bankruptcy since 2016, does not plan to pursue an unsolicited $1.8 billion cash offer from Lime Rock Resources, Reuters reported. The offer from Houston-based Lime Rock, which invests in oil-and-gas properties, surfaced last month as Breitburn was awaiting a ruling on its bankruptcy reorganization plan. The confirmation hearing ended in January after a bitter valuation battle between Breitburn and its shareholders who argued it undervalued the company. In a filing with U.S. Bankruptcy Court in Manhattan late Friday, Breitburn said it was not required to “pursue conditional offers thrown across the transom, particularly after the close of a contested Confirmation Hearing.” Houston, Texas-based Lime Rock’s $1.8 billion stalking-horse offer tops a $1.6 billion enterprise valuation by Breitburn’s investment bank.

A Lake City farmer has been sentenced to 18 months in federal prison for committing fraud to get bank loans, crop insurance proceeds and ease a bankruptcy burden, the Associated Press reported. Federal prosecutors say that Clint Devries was sentenced on Wednesday after pleading guilty in September to two counts of making false statements and one count of bankruptcy fraud. Prosecutors say that he lied from 2013 through 2015 to a bank about the amount of crops he had in storage and other things to obtain farm operating loans. He later defaulted on more than $400,000 in loans from the bank. Officials say he also lied to the Federal Crop Insurance Corp. to fraudulently obtain crop insurance proceeds, and that in 2015, he lied to a bankruptcy trustee about sales of his crops.

A developer with grand plans to build the $400 million iSquare Mall + Hotel on International Drive in Orlando, Fla., has been accused of commingling funds in a bankruptcy case, which the lender says was filed in a “lack of good faith,” the Orlando Sentinel reported. The lender is asking a judge to throw out the bankruptcy, which could allow it to seize the property where Abdul Mathin planned to build iSquare. That would spell an end to Mathin’s iSquare plan, at least in that location. He had planned to demolish the 1980s-era International Shoppes retail center and build iSquare on the property. The Delaware lender, Elizon DB, is objecting to the bankruptcy of International Shoppes, which is owned by Mathin.

The shuttered McNally Smith College of Music filed for chapter 11 protection on Thursday, two months after abruptly closing without giving faculty and staff their final paychecks, the Minneapolis Star Tribune reported. In the filing, the school indicated that it had assets between $10,000,001 and $50 million and estimated liabilities between $1,000,001 and $10 million. The filing also says that the college anticipates being able to pay the creditors, estimated to number between 200 and 999. With the school’s abrupt closing in December, more than 300 students were left scrambling to find ways to finish their education, and faculty and staff were left without final paychecks before the holidays.

The bankrupt Boston Herald has received a third bid less than a week from its chapter 11 auction, with MediaNewsGroup hoping to add the newspaper to its current roster of about 100 publications in states that include California, Colorado and Massachusetts, WSJ Pro Bankruptcy reported. Brown Rudnick LLP, the law firm handling the chapter 11 bankruptcy for the Boston Herald and related companies, on Thursday confirmed the third bid, from MediaNewsGroup. The terms of the offer weren’t immediately disclosed, but under rules approved by Judge Laurie Selber Silverstein in U.S. Bankruptcy Court in Wilmington, Del., a new offer will be considered a “qualified” bid if it, among other things, exceeds the two current proposals by at least $600,000.