%1

A bankruptcy watchdog raised concerns about a potential $2 million loan to off-air golf channel Back9Network Inc., saying the deal could lead to an unfair, noncompetitive sale of the channel’s smartphone app to several investors, the Wall Street Journal reported on Thursday. In court papers, U.S. Trustee William K. Harrington protested the borrowing deal, saying that the fine print of the agreement could give an advantage to the lender over other potential buyers who might want the TV channel’s business. Under the deal, five investors in the channel have proposed to extend a $2 million loan that could later turn into money for a bid on Back9Network’s smartphone app, which has mapped out more than 35,000 golf courses around the world. The app has been downloaded more than three million times and is used for hundreds of thousands of rounds each month, according to documents filed in U.S. Bankruptcy Court in Hartford, Conn. The borrowing proposal still needs approval from Judge Ann M. Nevins.

A federal judge says Yellowstone Club's founder Tim Blixseth is "unrepentant" and should remain in jail for contempt until he accounts for the millions of dollars he owes to creditors of the ultraluxurious ski and golf resort, Dow Jones Daily Bankruptcy Review reported today. U.S. District Judge Sam Haddon on Wednesday said that Blixseth, a former billionaire real estate developer, has deliberately misled the court and has failed to account for the proceeds from the $13.8 million sale of the Tamarindo resort in Mexico. "To this day, Blixseth has not fully and completely accounted for the Tamarindo sale proceeds," Judge Haddon wrote in a 40-page opinion. "He remains in contempt and, from the record, remains unrepentant."

A hedge fund founded by golfer Greg Norman is bidding $10 million for the bankrupt manufacturer of the Nabi children’s tablet, the Wall Street Journal reported today. Great White Shark Opportunity Fund LP, a hedge fund founded by the golfer in 2013, made an 11th-hour offer on Wednesday for Fuhu Inc., topping an initial offer from children’s retail giant Mattel Inc. The tablet maker selected the fund, an investment arm of Norman’s sprawling Great White Shark Enterprises, lead bidder for its business at a hearing in U.S. Bankruptcy Court in Wilmington, Del. The fund has also agreed to finance Fuhu’s bankruptcy case with a bankruptcy financing package.

DigitalSound Production Services Inc., which has provided lighting and sound for bands and movies, won bankruptcy court approval to sell its assets for about $6.4 million, the Wall Street Journal reported on Thursday. Bankruptcy Judge Martin R. Barash on Dec. 24 authorized the sale of the Los Angeles-area company’s assets to Video Equipment Rentals and Production Resource Group LLC, court papers show. DigitalSound attorney Susan Seflin said the deal consists of $4.35 million in cash and the assumption of nearly $2.1 million in liabilities. She said that the sale is set to close on Jan. 5 and is expected to provide jobs for at least 12 of DigitalSound’s 28 employees.

Distressed-company investor Lynn Tilton lashed out at the Cayman Islands corporate directors who moved to block her attempt to force one of her debt-investing vehicles into bankruptcy, Dow Jones Newswires reported yesterday. She says the directors have ignored their duties to Zohar — a collateralized loan obligation, or CLO, fund — in favor of protecting the interests of the Cayman Islands, which is receptive to creators of sophisticated financial vehicles like Zohar-I. It is a conduit stuffed with loans to troubled companies, and the conduit itself is in trouble. It missed a payoff date in November and was bailed out by bond insurer MBIA Inc. Tilton, who was accused of fraud by the Securities and Exchange Commission in connection with her CLO operation, has denied wrongdoing and vowed to fight the charges. Now she is battling directors in the Cayman Islands, who have said her attempt to invoke bankruptcy protection for Zohar-I runs afoul of the agreements that created the specialized investment vehicle.

American Apparel Inc. is seeking to keep a tight grip on its bankruptcy case as its creditors cast their votes on the retailer's plan to exit bankruptcy protection, Dow Jones Daily Bankruptcy Review reported today. In a court filing on Monday, lawyers for American Apparel requested a 90-day extension of the company's exclusive right to file a reorganization plan. The company's request comes just a few weeks after ousted American Apparel founder Dov Charney hired Cardinal Advisors to help him line up investors that would keep him involved with the troubled retail chain. Charney has been garnering interest from new investors, and some bids could be completed in the upcoming weeks. The process has especially interested institutional investors. It is still unclear what role Charney would play at the company if he were to find an investor willing to buy it. A successful bid would most likely have to exceed $350 million to cover the money owed to bondholders in the bankruptcy process, as well as pay off the $90 million in postpetition financing and provide the $40 million of exit financing that is part of the chapter 11 plan.

Lehman Brothers Holdings Inc. is suing Daiwa Securities Capital Markets Co. over hundreds of soured swaps and options, claiming the Japanese investment bank shortchanged it on hundreds of derivatives contracts after Lehman’s bankruptcy to reap a multimillion-dollar windfall, the Wall Street Journal reported today. In a lawsuit filed with U.S. Bankruptcy Court in New York, lawyers for Lehman say the bank was “in the money” to the tune of $75 million on 955 derivatives transactions — mainly interest rate and credit default swaps — with Daiwa at the time of Lehman’s 2008 bankruptcy filing. Daiwa used “commercially unreasonable and bad-faith valuation techniques, including deducting tens of millions of dollars of ‘unwind costs’ that it did not incur” from its valuations of the derivatives transactions, Lehman’s lawyers claim in the suit, filed last week. Lehman is asking Bankruptcy Judge Shelley C. Chapman for the $75 million it says it was owed at the time the swaps were terminated, plus interest. It is also asking the judge to toss Daiwa’s $46 million claims against Lehman.

Caesars Entertainment Corp. defeated bondholder demands for an early resolution of a lawsuit alleging the casino company failed to honor guarantees of bonds issued by its bankrupt subsidiary, sending the case to trial, Reuters reported yesterday. U.S. District Judge Shira Scheindlin said yesterday that there were material disputes regarding a May 2014 stock sale and its impact on the guarantees on $750 million of unsecured bonds. Those disputes would have to be resolved by a trial, the judge said in a 31-page opinion that denied the bondholders' request for a quick ruling. Bondholders MeehanCombs Global Credit Opportunities Funds and Frederick Barton Danner alleged that Caesars violated the Trust Indenture Act, or TIA, by unilaterally releasing consent guarantees of bonds issued by its bankrupt operating unit. Scheindlin's ruling on Tuesday follows a similar decision in August in a case brought by representatives of other bondholders suing Caesars over similar violations of the TIA, a Great Depression-era law meant to protect bondholders. Caesars has said that if it loses the TIA cases it would likely be forced to join its operating unit in bankruptcy. Caesars said in court papers filed on Monday it would seek an injunction staying the case until 60 days after an independent examiner, Richard Davis, completed his investigation of alleged fraudulent transfers of the casino company's assets. The examiner was ordered by U.S. Bankruptcy Judge Benjamin Goldgar and the examiner's report is expected in early 2016.

KaloBios Pharmaceuticals Inc, which fired chief executive Martin Shkreli earlier this month, filed for chapter 11 protection yesterday, Reuters reported. The drugmaker listed both its assets and liabilities in the range of $1 million to $10 million in its filing with the U.S. Bankruptcy Court for the District of Delaware. The move comes on the heels of KaloBios' appeal of the Nasdaq decision to delist its shares. A hearing on the appeal has been scheduled for Feb. 25, KaloBios said yesterday. The company on Monday said that two of its directors, Tom Fernandez and Marek Biestekhad, had resigned in the wake of Shkreli's arrest for alleged securities fraud. KaloBios named Shkreli as its CEO on Nov. 20, after Shkreli and a consortium of investors bought about 70 percent of its shares. Shkreli was arrested on Dec 17 for engaging in what U.S. prosecutors said was a Ponzi-like scheme at a hedge fund and a pharmaceutical company he previously headed.

A golf channel that briefly aired to DirecTV subscribers before shutting down in February has filed for bankruptcy with a $2 million offer for a small piece of its operations: a smartphone app that mapped out more than 35,000 golf courses around the world, the Wall Street Journal reported today. Officials who put Hartford, Conn.-based Back9Network Inc., into bankruptcy on Dec. 23 said that a handful of investors want to save the app and repay some of the channel’s debts, including a $4.75 million loan from Connecticut’s economic development agency. The channel, which aired briefly on DirecTV satellite network’s channel 262, said that it didn’t have enough money to get off the ground since its 2010 founding despite investors putting than $38 million to the company.