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A lawyer for Texas tycoon Sam Wyly argued on Wednesday that the Internal Revenue Service had failed at trial to prove the businessman used offshore trusts to engage in a massive tax fraud, Reuters reported yesterday. Don Lan, a lawyer for Sam Wyly and the widow of his brother Charles, Caroline Wyly, said during closing arguments in a trial in federal bankruptcy court in Dallas that the IRS's case amounted to little more than "allegations and innuendo." The IRS, which is seeking $2.2 billion from the Wylys, had contended the brothers since 1992 used offshore trusts to avoid paying taxes while exercising stock options and warrants of four companies on whose boards the brothers sat. But Lan said the Wylys had relied on the advice of lawyers and other advisors in utilizing the offshore system.

Quiksilver Inc., the California-based surfwear and skatewear retailer, won final bankruptcy-court approval of a plan that restructures some $800 million in debt and ensures a fresh start for the company under its new private-equity owner, Oaktree Capital Management, the Wall Street Journal reported today. In approving the plan, Bankruptcy Judge Brendan Shannon cleared the way for the company to “start the ball rolling” and exit chapter 11 protection as soon as next week. Under a deal reached before Quiksilver filed for bankruptcy, Oaktree and other secured bondholders will forgive $279 million of bond debt in exchange for control of the retailer. Oaktree holds about 75 percent of that debt and will receive a majority stake in the restructured company, court papers show.

The operator of 13 nursing homes in Tennessee, Georgia and Ohio got permission from a bankruptcy judge to spend restricted money while its lawyers come up with a survival plan, Dow Jones Daily Bankruptcy Review reported today. With his signed court order, Bankruptcy Judge Nicholas W. Whittenburg approved the spending request from New Beginnings Healthcare & Rehab LLC officials. The Hixton, Tenn.-based company sought bankruptcy protection on Jan. 22. The nursing-home operator, which employs about 1,300 people, blamed its financial troubles on Georgia health regulators who have withheld Medicaid money that pays for some of the 800 residents at its nursing homes. Read more. (Subscription required.) 

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Biomedical company Nuo Therapeutics Inc., which makes a gel to treat skin ulcers, filed for bankruptcy and plans to sell its assets to health care-focused hedge fund Deerfield Management, Dow Jones Daily Bankruptcy Review reported yesterday. The Maryland company, which filed for chapter 11 protection in U.S. Bankruptcy Court in Wilmington, Del., said that it expects Deerfield to serve as the stalking-horse bidder for its assets at a bankruptcy-court-supervised auction. Those assets include the company's flagship, Aurix, a "hematogel" that uses a patient's own platelets and plasma as a catalyst for healing. It is the only therapy of its kind cleared by the Food and Drug Administration for use for the treatment of a variety of ulcers and wounds, according to David E. Jorden, the company's acting chief executive.

After months of disputes, Quiksilver Inc. is close to reaching a deal on how much its junior creditors will be paid in the company’s bankruptcy settlement, Bloomberg News reported yesterday. The bankrupt surfwear retailer’s senior creditor, Oaktree Capital Management LP, has agreed to pay $14 million in cash as well as a small percentage of the equity in the reorganized entity. A committee representing lower-ranking creditors said that they deserved $91 million based on Quiksilver’s value, according to court papers filed Jan. 21. The group argued in the filing that the retailer’s assets are worth about $690 million, while the company said that they’re worth about $546 million. The deal is designed to enable the company to emerge from bankruptcy under its expected time frame. The hearing to confirm Quiksilver’s restructuring is scheduled for today.

Telecom firm Great Lakes Comnet Inc., which connects telecom giants like Verizon to customers in rural Michigan through a 6,500 mile-long fiber network, filed for bankruptcy protection as it battles AT&T Corp. over illegally charged fees, Dow Jones Daily Bankruptcy Review reported today. Officials who put Great Lakes Comnet into chapter 11 protection on Monday accused AT&T officials of withholding more than $24 million in payments for service although the Federal Communication Commission has yet to determine how much Great Lakes Comnet owes in the dispute. AT&T filed a complaint against Great Lakes Comnet in October 2014, saying it charged higher fees than were allowed by a regulatory benchmark for interstate access services. The FCC, which ruled in AT&T's favor in March 2015, has yet to calculate damages. AT&T officials, however, have stopped paying the full billed amount for the services it receives from Great Lakes Comnet, Chief Executive John Summersett said in court papers.

Paper manufacturer Verso Corp. filed for chapter 11 bankruptcy protection on Tuesday, its business battered by the turn to online channels that drove down demand for its products, the Wall Street Journal reported today. Verso President and Chief Executive David J. Paterson said that the company has worked “to develop a restructuring plan to eliminate $2.4 billion of our outstanding debt” and exit bankruptcy proceedings “in a short time frame.” Memphis, Tenn.-based Verso has been trying to work out a restructuring of its overloaded balance sheet. The maker of coated paper used in magazines and catalogs is carrying more than $2.8 billion in debt and paying interest of more than $270 million annually.

Samson Resources Corp.'s interim chief executive and chief operating officer will resign next month, continuing a wave of leadership departures at the bankrupt oil and gas producer, Dow Jones Newswires reported yesterday. Richard Fraley, who took on the job of interim CEO in addition to his COO duties following last month's resignation of CEO Randy Limbacher, will depart on Feb. 15, according to a Monday filing in Samson's chapter 11 case. Three vice presidents have also announced their resignation, court papers say, and the attrition rate of Samson's general workforce "has significantly accelerated since the end of 2015." Read more. 

Listen to a podcast featuring Deborah D. Williamson, a co-author of ABI's When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, discussing current distress in the oil and gas industry, and providing an outlook for 2016. 

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Be sure to attend ABI’s Annual Spring Meeting in Washington, D.C., from April 14-17, as a panel of experts will further addressing bankruptcies in the oil industry. Register here. 

JPMorgan Chase & Co. will pay $1.42 billion in cash to resolve most of a lawsuit accusing it of draining Lehman Brothers Holdings Inc. of critical liquidity in the final days before that investment bank's September 2008 collapse, Reuters reported yesterday. The settlement was made public yesterday, and requires approval by U.S. Bankruptcy Judge Shelley Chapman. It resolves the bulk of an $8.6 billion lawsuit accusing JPMorgan of exploiting its leverage as Lehman's main "clearing" bank to siphon billions of dollars of collateral just before Lehman went bankrupt on Sept. 15, 2008, triggering a global financial crisis. Lehman's creditors charged that JPMorgan did not need the collateral and extracted a windfall at their expense.

Bankruptcy Judge Brendan Shannon yesterday said that he would approve American Apparel Inc.’s plan to exit bankruptcy and rejected a takeover attempt from the teen retailer's founder and ousted chief executive, Dov Charney, Reuters reported yesterday. The ruling by Judge Shannon clears the way for hedge funds including Monarch Alternative Capital to control the operator of more than 200 stores when it exits chapter 11. Los Angeles-based American Apparel Inc., known for its "Made in the U.S.A." fashion and sexually charged advertising, filed for bankruptcy in October, blaming changing tastes and too much debt. The reorganization plan that Judge Shannon approved would cut more than $200 million of debt and provide a cash boost. Under that plan, the company expects to be profitable in 2018, which would be the first time since 2009.