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A new legal dispute has stalled the final resolution of a bankruptcy case prompted by a sexual abuse case involving the Diocese of Gallup, lawyers say, the Associated Press reported yesterday. The dispute involves a new lawsuit filed by attorney Robert E. Pastor against the Sisters of the Blessed Sacrament, a religious order that founded St. Michael Indian School in Arizona. The suit claims a Navajo woman was sexually abused at the school by a Franciscan friar, <em>The Gallup Independent</em> reported. The Gallup Diocese, the Franciscans and St. Michael Mission Church have already reached a settlement agreement with another Navajo woman related to abuse. That settlement was part of the diocese’s bankruptcy case that was confirmed in June. As a result, the Diocese of Gallup, the Franciscans and St. Michael’s Church are protected parties and not named as defendants in Pastor’s lawsuit. 

The Roman Catholic Archdiocese of St. Paul and Minneapolis has offered to pay $132 million to settle hundreds of child sex abuse claims against its clergy under a revised bankruptcy reorganization plan filed in court on yesterday, Reuters reported. The archdiocese, one of 15 U.S. Catholic districts and religious orders driven to seek chapter 11 protection by the church's sex abuse scandal, said its plan would mark the second-largest such bankruptcy settlement of pedophile priest claims in America. The sum is more than double the $65 million previously offered by the archdiocese and rejected by plaintiffs. But lawyers representing the bulk of nearly 450 claims at stake in St. Paul-Minneapolis denounced the latest proposal as still far too small and accused church officials of trying to conceal their ability to pay much more. The San Diego diocese settled sex abuse claims in 2007 for a total of $198 million after filing for Chapter 11. The Los Angeles archdiocese, the nation's largest, reached a $660 million civil settlement the same year, though that was not part of a bankruptcy proceeding. Those agreements amounted to about $825,000 and $780,000 per victim, respectively, according to the watchdog website BishopAccountability.org. Spread evenly across the Twin Cities claims, each victim there stands to gain less than $300,000 under the archdiocese's amended plan, plaintiffs attorney Mike Finnegan said.

A federal judge told San Bernardino, Calif., officials to negotiate with an insurer to gain access to money that would have gone to families who have filed lawsuits claiming police brutality, an issue that’s again delayed the exit of the city of 200,000 from bankruptcy, the Wall Street Journal reported today. Bankruptcy Judge Meredith Jury said yesterday that another bankruptcy judge will mediate a dispute between city leaders and insurance administrators over coverage for major lawsuits, including the police litigation. She set a Dec. 6 hearing to determine whether the city can leave bankruptcy protection after more than four years. The city had filed for bankruptcy on Aug. 1, 2012, saying that it suffered from double-digit unemployment and lower tax revenue from fallen property values. City lawyers have proposed a 76-page plan that would pay 1 percent of $209.3 million owed to retirees, families who have won police brutality lawsuits and other unsecured debts. Under that plan, which Judge Jury must approve, a European bank owed $51 million in bond debt would be paid 40 percent of its claim over 30 years, according to documents filed in U.S. Bankruptcy Court in Riverside.

SunEdison Inc. doused indications that the bankrupt renewable energy developer and TerraForm Power Inc. are coming closer to settling disputes stemming from their tumultuous legal and financial relationship, the Wall Street Journal reported today. SunEdison said in a statement yesterday that a presentation made to TerraForm Power investors last week was lacking in key details about cards SunEdison says that it still holds in the ongoing talks. SunEdison cautioned that negotiations are in early stages and that it is still reviewing critical information, including a settlement proposal TerraForm Power has already circulated to major players in SunEdison’s bankruptcy. TerraForm Power and TerraForm Global Inc., the so-called “yieldcos,” are publicly traded offshoots of SunEdison that were created to help finance big energy projects. The yieldcos bought SunEdison’s renewable energy projects, ensuring a steady stream of cash to SunEdison investors, but have since taken center stage in SunEdison’s bankruptcy.

American Apparel Inc. founder Dov Charney, who was ousted by his own board for misconduct in 2014, said the retailer’s latest bankruptcy filing shows that the company can’t stay afloat without him, Bloomberg News reported yesterday. The largest producer of American-made clothing filed for bankruptcy yesterday, just nine months after ending its first stint under court protection. Even with an injection of cash and a reduction in debt, a turnaround plan led by Paula Schneider, who replaced Charney as CEO, failed to revive American Apparel’s fortunes. The Los Angeles-based company plans to sell itself at auction to Gildan Activewear Inc., which has a leading offer of $66 million. Gildan will continue selling American Apparel’s basics, like plain T-shirts, to screenprinters and promotion companies. But the bid doesn’t include American Apparel’s almost 200 stores, so if it lives on as a consumer-facing brand under Gildan, it would have to be sold through other retailers. Read more. 

Top restructuring experts will discuss the trend of retail bankruptcies and lessons to be learned from “chapter 22” filings at ABI’s Winter Leadership Conference. Click here to register.

Bankrupt U.S. coal producer Peabody Energy Corp., which is looking to sell assets in Australia, is seeking permission for Lazard Freres & Co LLC to provide merger and acquisition services for its foreign unit, according to court papers filed on Thursday, Reuters reported. Lazard has been serving as investment banker to Peabody since it filed for chapter 11 bankruptcy in April, but the engagement did not cover merger and acquisition services, which the world's largest private-sector coal company said it now needs. Peabody filed for protection from its creditors after a sharp drop in coal prices left it unable to service $10.1 billion in debt, much of which was incurred to finance an expansion in Australia.

Thousands of empty shipping containers, stranded in Southern California after the bankruptcy of South Korean ocean carrier Hanjin Shipping Co., may now have a way to get back to Asia, the Wall Street Journal reported today. The Port of Long Beach and Total Terminals International LLC (TTI) — which runs port terminals for Hanjin, including its Southern California operation in Long Beach — have arranged for a container ship to remove 4,300 containers that have been sitting in container yards and warehouse lots since the bankruptcy filing. Port officials said on Thursday that they expect the ship to arrive in the next several days. TTI will load containers onto the ship at cost and the port has agreed to waive wharfage fees. For weeks after Hanjin entered bankruptcy proceedings, most major West Coast ports were turning away loaded and empty Asia-bound containers owned or leased by Hanjin. Freight-handling businesses scrambled to rebook outbound loads on other carriers, but most of the empty containers stayed put.

A federal judge on Friday said that investors seeking to hold banks liable for helping underwrite more than $7.7 billion of mortgage-backed securities from the now-bankrupt subprime lender NovaStar Mortgage Inc. may pursue their claims as a group, Reuters reported today. In a 33-page decision, U.S. District Judge Deborah Batts in Manhattan granted class certification to investors led by the New Jersey Carpenters Health Fund against units of Royal Bank of Scotland Group Plc, Deutsche Bank AG and Wells Fargo & Co. Several former NovaStar executives are also defendants. NovaStar specialized in lower-quality residential mortgages, including many packaged into securities issued in 2006 and 2007.

As auto supplier Takata Corp. prepares for a possible U.S. bankruptcy filing, potential bidders are poring over a recent U.S. court ruling that could expose a buyer to liability for the company's defective air bags, sources have told Reuters. Takata faces potentially billions of dollars in costs from the world's largest automotive recall, stemming from millions of its air bags that were equipped with malfunctioning inflators. The Japanese company has said that it is seeking a financial backer. But interested bidders, if the parts maker goes up for sale, want Takata to put its U.S. business into bankruptcy first. General Motors filed for chapter 11 in 2009, selling its best assets to "new GM," scrubbed free of billions of dollars of debt, which enabled the company to withstand an economic crisis. In July, the U.S. Court of Appeals for the Second Circuit held that General Motors Co., the "new GM," could be sued over faulty ignition switches made by "old GM." "What that says to me: buyer beware," said Henry Jaffe of Pepper Hamilton in Wilmington, Del., who represents debtors and creditors. Jaffe, who took part in a special abiLIVE webinar with Greenberg Traurig, LLP’s John Hutton to examine the ruling, said that the Second Circuit’s decision could undercut what bidders are willing to pay for Takata. Read more. 

Click here to watch the abiLIVE webinar. http://cle.abi.org/product/no-cle-abi-live-2nd-circuit-decision-gm-incr…