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Lehman Brothers Holdings Inc. sold the NYLO New York City hotel, bringing the unwinding of the bank’s real estate investments close to completion almost eight years after its bankruptcy, Bloomberg News reported yesterday. The buyer of the hotel, at Broadway and 77th Street, was Ashkenazy Acquisition Corp. Ashkenazy, which also operates Boston’s Faneuil Hall Marketplace and the retail at Washington’s Union Station, paid about $140 million for the 291-room property. The NYLO, first listed for sale in 2014, was one of the final properties remaining in the real estate portfolio that helped contribute to the investment bank’s demise in 2008. After filing for the biggest bankruptcy in U.S. history, Lehman Brothers reinvested in many of its properties and waited for opportune times to bring them to the market. Its biggest deal was the sale of apartment owner Archstone Inc. in early 2013 for about $6.5 billion. Lehman Brothers has about $400 million left in commercial real estate assets, according to bankruptcy court filings.

The Missouri hotel company founded by John Q. Hammons, which filed for bankruptcy over the weekend, received court permission yesterday to continue operating its business as usual, Dow Jones Newswires reported. Bankruptcy Judge Robert D. Berger signed off on the company's request to continue using its cash for bills, paying its more than 4,000 employees and honoring customer reward programs. The permission to spend cash was granted on an interim basis, with parties scheduled to return to court July 15 for a final hearing. The John Q. Hammons bankruptcy filing comes ahead of a July 26 trial in the Chancery Court of Delaware to determine whether the company must sell its assets. That litigation is temporarily halted because of the bankruptcy filing. The case in Delaware involves a 2005 buyout of some of the Hammons hotel business by Jonathan Eilian, the former managing director of private-equity giant Starwood Capital Group. Eilian purchased 43 Hammons hotel properties. Hammons, who died in 2013, received an equity interest in the acquiring company, preferred stock valued at $328 million and $300 million in lines of credit in exchange. The deal's complicated structure was devised to provide Hammons with cash without triggering capital-gains taxes associated with a sale, according to court papers.

The Supreme Court yesterday granted certiorari in Czyzewski v. Jevic Holding Corp. to decide whether bankruptcy courts are allowed to dismiss chapter 11 cases when property is distributed in a settlement that violates the priorities contained in Section 507 of the Bankruptcy Code, according to an analysis by ABI Editor-at-Large Bill Rochelle. Although Jevic deals with structured dismissals, the Supreme Court’s decision might also have the effect of allowing or barring so-called gift plans where a secured creditor or buyer makes a payment, supposedly from its own property, that enables a distribution in a chapter 11 plan not in accord with priorities. Granting certiorari was not surprising because there has been a long-standing split of circuits. Click here to read Rochelle's exclusive analysis. 

Click here to view the certiorari petition and other Jevic case documents on ABI's Supreme Court page. 

"Dance Moms" star Abby Lee Miller pleaded guilty Monday to bankruptcy fraud and failing to report thousands of dollars in Australian currency she brought into the country, the Associated Press reported yesterday. Miller pleaded guilty to one count of concealing bankruptcy assets and one count of structuring international monetary transactions. She was charged last fall with illegally trying to hide $775,000 worth of income from the Lifetime network reality show and spinoff projects during her Chapter 11 bankruptcy. Authorities later accused her of dividing more than $120,000 into plastic bags and having others in her group put the bags in their luggage in August 2014, violating a law requiring people to report bringing more than $10,000 worth of foreign currency into the country. Read more. 

Don’t miss the “Practicing in the Limelight: The Challenges Faced in Cases Involving High-Profile Debtors” session at ABI’s 11th Annual Northeast Consumer Forum on July 14-16! 

ION Worldwide Inc., a maker of wearable digital recorders that competes with industry leader GoPro Inc., has filed for bankruptcy after seeing its revenue drop significantly last year, the Wall Street Journal reported today. The New Jersey company has already reached a restructuring support agreement with one of its lenders, which would cut more than $15 million in debt from its balance sheet and allow iON to stay in business. ION Chief Financial Officer Chris Oatway said in court papers filed last week that the cash-starved company has been mired with problems, including disputes with one of its licensed brands and an intellectual-property lawsuit with GoPro. ION makes a line of wearable cameras in a variety of sizes, home-security products and dash cams, among other products, under the iON and Contour brands. ION saw its revenue drop to $12.4 million in 2015 from more than $25 million in 2014, Oatway said in court papers. The company sought to cut costs, and it laid off employees, but that wasn’t enough to stave off bankruptcy.

NextEra Energy Inc. has offered to buy Energy Future Holdings Corp.’s Oncor Electric Delivery Co. and is closest to reaching a deal among at least seven companies that have expressed interest in the Texas power utility, Bloomberg News reported yesterday. NextEra has submitted its bid to Energy Future Holdings, which is working to emerge from bankruptcy after two years. Berkshire Hathaway Inc. and Edison International are among the others that have expressed interest in buying Oncor. The company may be valued at $17 billion to $18 billion. Energy Future is holding negotiations after a plan to sell the power utility to a group led by Hunt Consolidated Inc. unraveled. Oncor’s takeover is seen as key to Energy Future’s emergence from bankruptcy after restructuring almost $50 billion in debt.

Investors who bought interests into drilling ventures from Primera Energy LLC, a San Antonio company once headed by Brian K. Alfaro, will recover nothing from a bankruptcy reorganization plan confirmed yesterday by a bankruptcy judge, MySanAntonio.com reported. Alfaro has been accused of defrauding investors in the sale of interests in various oil and gas drilling ventures. The investors have more than $18 million in claims, making them Primera’s largest group of creditors. They will receive nothing under the plan, which bankruptcy trustee Jason Searcy said is a liquidation. Searcy is reviewing possible legal claims against Alfaro. Read more. 

For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. 

Bankruptcy Judge Barbara Houser yesterday ordered former billionaire Sam Wyly to pay $1.11 billion in back taxes, interest and penalties after finding he committed tax fraud by shielding much of his family's wealth in offshore trusts, Reuters reported. Judge Houser calculated the payout after ruling on May 10 that Wyly and his late brother Charles conducted a "deceptive and fraudulent" scheme to cheat the Internal Revenue Service. The payout includes roughly $135.5 million of taxes, $402.1 million of interest, and $570.1 million of penalties. The Wylys were once among Dallas' most prominent families, building their fortune on holdings in such companies as arts-and-crafts chain Michaels Stores Inc. and Sterling Software Inc. But Sam Wyly and his brother were sued in 2010 by the U.S. Securities and Exchange Commission, for allegedly using a web of trusts in the Isle of Man and Cayman Islands to hide stock sales from 1992 to 2004 in Michaels, Sterling and two other companies. Charles Wyly died in a car crash in August 2011, and the government thereafter pursued claims against his estate. Sam Wyly filed for bankruptcy protection in October 2014 after he and his brother's estate were held liable in the SEC case, for an amount the regulator estimated at $299.4 million. Read more. 

For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. 

The Supreme Court today granted certiorari in Czyzewski v. Jevic Holding Corp. to decide whether bankruptcy courts are allowed to dismiss chapter 11 cases when property is distributed in a settlement that violates the priorities contained in Section 507 of the Bankruptcy Code, according to an analysis by ABI Editor-at-Large Bill Rochelle. Although Jevic deals with structured dismissals, the Supreme Court’s decision might also have the effect of allowing or barring so-called gift plans where a secured creditor or buyer makes a payment, supposedly from its own property, that enables a distribution in a chapter 11 plan not in accord with priorities. Granting certiorari was not surprising because there has been a long-standing split of circuits. Click here to read Rochelle's exclusive analysis. 

Click here to view the certiorari petition and other Jevic case documents on ABI's Supreme Court page.

A privately owned, Missouri-based hotel company founded by John Q. Hammons filed for bankruptcy protection Sunday, just weeks before the start of a trial to determine if the company must sell its hotels, Dow Jones Newswires reported on Friday. More than 70 affiliates owned by the John Q. Hammons trust filed for protection in U.S. Bankruptcy Court in Kansas City, Kan. Based in Springfield, Mo., the company owns and manages 35 hotels for companies like Marriott, Sheraton and Hilton's Embassy Suites. The companies listed assets and debts each of more than $1 billion, according to court papers. The bankruptcy filing involves a group of hotels that Hammons retained ownership of after the 2005 buyout of his hotel business by Jonathan Eilian, the former managing director of private-equity giant Starwood Capital Group. The 2005 buyout involved some 43 hotels owned by John Q. Hammons Hotels. Hammons himself received an equity interest in the acquiring company — a partnership with Eilian — as well as preferred stock valued at $328 million and some $300 million in loans.