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Investors led by Relativity Media LLC's founder and chief executive, Ryan Kavanaugh, have completed a deal to take control of the Hollywood studio the same week the company announced it had completed the sale of its television business to senior lenders, Dow Jones Daily Bankruptcy Review reported today. Kavanaugh's investors include supermarket mogul Ron Burkle, Chicago-based investor Joseph Nicholas and Orinda, Calif.-based VII Peaks Capital LLC, court papers show. The group said on Wednesday that it had completed transactions allowing it to take control of what remains of Relativity, buying out all but $60 million of the company's senior debt for $65 million in cash.

Junior bondholders in the Caesars Entertainment casino bankruptcy accused restructuring attorneys of allegedly misleading a judge and said that they should be disqualified from handling parts of the case, Reuters reported yesterday. The allegation adds to the bitterness of the $18 billion bankruptcy, which has pitted the private-equity owners of Caesars Entertainment Corp. against the junior creditors of the company's operating unit. In a Wednesday court filing, junior creditors said that they had unearthed evidence that they said showed that attorneys with Kirkland & Ellis, which represents the bankrupt operating unit CEOC, misled the court about potential conflicts. The junior creditors are represented by a team of lawyers from Jones Day, and they asked Bankruptcy Judge Benjamin Goldgar to address the matter at a hearing on Nov. 18. Judge Goldgar has already approved the hiring of Kirkland over a previous objection by junior creditors. Goldgar could decline to revisit the issue, or consider the request to disqualify some of Kirkland's retention.

The sale of Relativity Media LLC’s television unit closed on Tuesday, freeing its leaders from the “distraction” of bankruptcy, the Wall Street Journal reported yesterday. Tom Forman, chief executive of Relativity Television, said that the studio behind MTV’s “Catfish” and other shows is poised for “supercharged” growth now that it has been spun off from bankrupt Relativity Media via a sale to a group of hedge funds. Relativity Media filed for chapter 11 protection in July on the heels of a string of box office flops and a mounting debt load that had reached $1.2 billion. But the TV studio was widely considered the most attractive of Relativity’s assets when, after filing for bankruptcy, the company announced it was putting itself on the auction block.

Through the bankruptcy of invention start-up Quirky Inc., inventors who submitted their products to Quirky might now get the chance to regain full ownership of their inventions, the Wall Street Journal Bankruptcy Beat blog reported yesterday. The committee, appointed about a month ago to represent unsecured creditors—including inventors who receive royalties from the sales of their products through Quirky—is asking the bankruptcy court to slow down the Quirky sale process, in part to allow inventors that opportunity. “Upon information and belief, the Committee understands that the Debtors’ advisors have received interest from certain of the inventors in ‘buying back’ some of the Products,” the committee said in court documents.

Cardiac Science Corp., a manufacturer of automatic heart defibrillators, filed for chapter 11 protection to sell its business after a cash crunch threatened its ability to pay employees and vendors, Dow Jones Daily Bankruptcy Review reported today. The Wisconsin-based company headed to court yesterday to request immediate access to $4.98 million of the $9 million bankruptcy loan it negotiated with its current lender, a fund associated with Los Angeles-based Aurora Capital Group. Cardiac ultimately would like to execute an exchange deal with Aurora whereby the fund would repay $6.5 million in senior debt owed to HDFC Bank, and forgive the $9 million bankruptcy loan plus another $65 million owed to Aurora in exchange for ownership of the company. Cardiac has requested permission to test that offer during an auction on Dec. 17.

Energy Future Holdings Corp. has sued to force the owner of 19.75 percent of its Oncor electricity-transmissions business to go along with a $12.2 billion deal designed to bail Energy Future out of bankruptcy, the Wall Street Journal reported today. Oncor, a cash-generating business that carries power to more than 3.2 million homes and businesses in Texas, is central to Energy Future’s chapter 11 exit proposal. It is set to be sold to an investment group led by Hunt Consolidated Inc., but minority stakeholder Texas Transmission Investment LLC is balking at the proposed sale. Energy Future on Monday asked a bankruptcy judge to enforce so-called drag-along rights in an agreement struck in 2008 after private-equity firms had taken over the Dallas energy giant, which was then called TXU Corp., in a debt-fueled deal.

Wilmington Trust, a representative for noteholders of Caesars Entertainment Corp.’s (CEC) bankrupt unit, has sued the casino operator for avoiding its written guarantee on repayment of more than $51 million of interest on the unit's debt, Reuters reported today. The lawsuit alleges that Caesars has not paid interest on 10.75 percent notes due 2016 issued by its unit Caesars Entertainment Operating Co. (CEOC), which filed for bankruptcy in January. The lawsuit filed by White & Case LLP today alleges that Caesars violated the U.S. Trust Indenture Act by voiding its guarantee of the operating unit's obligations. Wilmington Trust, which alleged that notes of about $479 million plus interest remain outstanding, said CEC had guaranteed payment of all principal and interest on the notes as and when due.

A Delaware bankruptcy court on Monday approved supermarket Haggen’s plan to auction off the bulk of its stores in early November, in a process underpinned by tentative deals with two California grocery chains, the Seattle Times reported today. Haggen agreed to sell 36 stores to Gelson’s Market and to Smart & Final in two stalking-horse deals, designed to set a baseline price for the auction. The United Food and Commercial Workers International Union (UFCW) objected to the plan last week, in part because Smart & Final, which operates no-frills warehouses in southern California, does not have a collective bargaining agreement with the union’s local affiliates. UFCW, which does not object to the deal struck with union-friendly Gelson’s, wanted more time to find other buyers for the 28 stores Smart & Final agreed to purchase. Others, including potential landlords, also filed objections with the court.

Metal-parts manufacturer LB Steel LLC filed for bankruptcy, hit with a nearly $30 million judgment in a legal battle over a Chicago airport project that played out during an industry-wide downturn, Dow Jones Daily Bankruptcy Review reported today. Officials who put LB Steel into bankruptcy protection on Sunday said that they plan to look for buyers for the 310-worker company, which operates out of a 450,000-square-foot manufacturing plant in the Chicago suburb of Harvey. Last week, a judge ruled that LB Steel owes $27.5 million to Walsh Construction Co. in a dispute over LB Steel's work on a canopy and curtain wall that was built at Chicago's O'Hare International Airport. Chicago officials who hired Walsh in 2003 to handle the project later "identified defects in the canopy and curtain wall," according to documents filed in U.S. Bankruptcy Court in Chicago.

A New York state judge has sided with a group of lenders that are blocking an Arch Coal Inc. debt-swap deal, effectively halting a transaction that advocates have said would keep the coal company out of bankruptcy, the Wall Street Journal reported today. Judge Saliann Scarpulla of the New York State Supreme Court denied a request by an affiliate of GSO Capital Partners that she prevent a group of majority lenders from freezing the debt swap. The standard for granting such a request is that the judge must find that allowing the lenders to proceed would do “irreparable harm.” She didn’t find that to be the case. “Because I find that Plaintiff’s alleged harm can be fully compensated by money damages by the Directing Defendants, Plaintiff’s harm is not irreparable. Plaintiff argues that, if Arch enters bankruptcy, any claim for money damages against the Directing Defendants would be more complex to prove. This, however, is not sufficient to establish irreparable harm,” she said in her ruling issued on Friday. Arch Coal, one of the country’s largest coal producers, is trying to get creditors to swap their debt in exchanges designed to improve Arch’s balance sheet as the coal market faces continued weakness.