%1

Jumio Inc., a venture-backed identity verification business whose customers include United Airlines Inc. and Airbnb Inc., filed for bankruptcy yesterday with a plan to sell itself to Facebook co-founder Eduardo Saverin, the Wall Street Journal reported today. The chapter 11 filing was authorized by the company’s board on Sunday, according to the resolution filed with the court. Saverin, who also is the main creditor of Jumio, is offering to acquire Jumio out of bankruptcy for $22.7 million, much of which is composed of debt forgiveness in addition to $3.2 million in cash. His bid would be subject to rival offers through a bankruptcy court auction process.

Bankruptcy Judge Mark S. Wallace yesterday approved the sale of the Orange County Register and the Riverside Press-Enterprise to Digital First Media, the Los Angeles Times reported today. Digital First’s $52.3 million offer for the assets of Freedom Communications prevailed over a higher bid of $56 million from Tribune Publishing, the parent company of the Los Angeles Times and San Diego Union-Tribune, which faced an antitrust battle in its effort to build a media empire stretching from the Mexican border to Los Angeles. If the deal closed, Tribune would have controlled 98 percent of English-language local daily newspapers for sale in Orange County, the government said. In Riverside County, Calif., Tribune would have owned four of the top five English-language newspapers by circulation, according to the department.

Attorneys for a New Mexico diocese have submitted a proposed settlement for a bankruptcy case that has spanned more than two years, the Associated Press reported yesterday. Attorneys for the Diocese of Gallup filed a reorganization plan yesterday that would use cash contributions of $21 million from nearly a dozen sources to settle claims filed by 57 alleged victims of clerical sexual abuse. Bankruptcy Judge David Thuma will consider the proposal at a hearing next month. The plan must also be approved by the claimants. An attorney for the claimants says some terms are still being negotiated, including policies to protect children. The diocese filed for chapter 11 protection in November 2013. Read more. 

To read more about litigation or liquidation trusts in bankruptcy, be sure to pick up a copy of ABI’s A Practitioner's Guide to Liquidation and Litigation Trusts. 

The Diocese of Duluth, Minn., is expected to enter mediation this summer with representatives of dozens of alleged victims of child sexual abuse, as the parties seek to reach an amicable agreement in the diocese's ongoing bankruptcy case, the Duluth News Tribune reported today. Bankruptcy Judge Robert Kressel approved a motion to appoint Judge Gregg Zive as a mediator to work with the diocese, its insurers and attorneys representing claimants. Judge Zive was mutually recommended by the diocese and St. Paul-based Jeff Anderson and Associates, the law firm representing most of its creditors. Judge Kressel said that Judge Zive is not expected to be available until June, which places the likely start date after the May 25 deadline for abuse victims to file claims in bankruptcy court.

Security systems company SDI Solutions filed for chapter 11 bankruptcy Sunday, with a buyout offer from a company led by former Chief Executive David Gupta, Dow Jones Daily Bankruptcy Review reported today. Gupta's PGV Solutions Midwest LLC bought secured debt of the privately held, Chicago-based SDI Solutions, to position to make a "credit bid" at a bankruptcy auction for the company, according to papers filed in the U.S. Bankruptcy Court in Wilmington, Del. SDI Solutions operates in the security system and IT industry, and provides systems integration and managed services for more than 700 customers nationwide, including state and local governments, airports, port authorities, utilities, financial institutions and commercial enterprises. It employs about 152 people. The company blamed a decline in revenue due to the loss of key contracts, and less favorable terms on contracts it was able to hold on to, for the liquidity squeeze that prompted its bankruptcy filing.

Arch Coal Inc. paid company insiders $29 million in the year leading up to its chapter 11 case, including more than $8 million in bonuses to top executives three days before its bankruptcy filing, the Wall Street Journal reported on Saturday. Arch executives and directors collected $29.17 million in wages, benefits, bonuses, director fees and other payments between January 2015 and this past January, according to papers filed this week in the St. Louis bankruptcy court. The payments included $8.12 million in bonuses paid out to seven executives on Jan. 8. Some $2.78 million of that amount went to Chairman and Chief Executive John Eaves. Arch sought chapter 11 protection on Jan. 11. However, a person familiar with the payments said the bonuses were awarded under longstanding, companywide incentive plans that had been approved by Arch’s board of directors. Some of the bonuses were earned over 2015, while the remainder was paid based on the company’s performance over a three-year period ended 2015.

A fight among top-ranking creditors of Energy Future Holdings Corp. has been decided in favor of banks and certain investors, marking a loss for first-lien bondholders that were fighting for a bigger share of the value flowing from the big power company's bankruptcy, Dow Jones Daily Bankruptcy Review reported today. About $90 million was at stake in the dispute, Judge Christopher Sontchi said in the decision issued on Friday. The Dallas company last year won confirmation of a chapter 11 exit plan that depends, in part, on winning the approval of federal tax authorities and state regulators for a novel deal that would convert its Oncor transmission business to a tax-advantaged structure before selling it. A decision from Texas regulators is expected by the end of the month on the sale of Oncor, which is largely owned by Energy Future's Intermediate division.

Investors who lost money when Jon Corzine's MF Global Holdings Ltd. collapsed reached a $29.83 million settlement with five underwriters that helped the futures brokerage sell bonds in the summer of 2011, less than three months before it went bankrupt, Reuters reported today. The preliminary accord resolves class action claims against Leucadia National Corp's Jefferies LLC unit, units of Bank of Montreal, Natixis SA and US Bancorp and Lebenthal & Co., according to papers filed on Friday. All denied wrongdoing. Investors led by the Virginia Retirement System and the Canadian province of Alberta accused the defendants of making false and misleading statements when they helped MF Global sell $325 million of 6.25 percent senior notes in August 2011, or were liable for misstatements in the bonds' offering materials.

Dodd-Frank gave the Federal Deposit Insurance Corp. authority to take over and oversee the reorganization of so-called systemically important financial institutions whose failure could pose a risk to the economy. However, no one can be sure the FDIC will follow its resolution strategy, which leads many to believe Dodd-Frank will be bypassed in a crisis, according to a Wall Street Journal commentary on Friday. The solution is not to break up the banks or turn them into public utilities. Instead, the commentary says that a step further than Dodd-Frank should be taken: Make big-bank failures feasible without tanking the economy by writing a process to do so into the bankruptcy code through a new amendment — a “chapter 14.” Chapter 14 would impose losses on shareholders and creditors while preventing the collapse of one firm from spreading to others. It could be initiated by the lead regulatory agency and would begin with an over-the-weekend bankruptcy hearing before a pre-selected U.S. district judge. After the hearing, the court would convert the bank’s eligible long-term debt into equity, reorganizing the bankrupt bank’s balance sheet without restructuring its operations.