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Caesars Entertainment Operating Co. opened a multi-day trial to determine the exact date it went bankrupt, a question that could threaten a $468 million claim senior lenders have made on the casino company’s cash and affect talks with lower-ranking creditors, Bloomberg News reported yesterday. The dispute might not be as important to the judge overseeing the $20 billion bankruptcy in Chicago as it is to the company. Bankruptcy Judge A. Benjamin Goldgar said yesterday that he’s in no hurry to rule on whether the chapter 11 case officially began on Jan. 12, when creditors filed to force Caesars into bankruptcy, or Jan. 15, when the company filed a voluntary petition. A fight over the cancellation of an employee pension is more of a priority to him, Judge Goldgar said. The dispute over the start of the bankruptcy involves a technical point of law. Bondholders filed a petition on Jan. 12 in Wilmington, Delaware, seeking to force the company into bankruptcy. The company filed its own bankruptcy case three days later in Chicago. The earlier date would fall within a legal time-period for the lower-ranking creditors to challenge a cash claim by senior lenders, who are allied with Caesars and support its reorganization plan. The later date would protect the lender claim to the $468 million.

Boston-based athletic gear retailer City Sports Inc. filed for chapter 11 protection yesterday in order to liquidate at least a quarter of its stores, the Wall Street Journal reported today. City Sports said that it has a deal with liquidators Tiger Capital Group to hold going-out-of-business sales at eight of the company’s 26 stores, which are scattered throughout the Northeast from Massachusetts to Washington, D.C. For the remaining 18 stores, City Sports is working to locate a buyer during its bankruptcy case that would either continue operating the stores or liquidate them, the company said in court documents.

Less than one year after Milwaukee entrepreneur Bobby Kraft led a group that bought World Marketing Inc. from Warren Buffett’s Berkshire Hathaway Inc., World Marketing’s operating companies have filed for chapter 11 reorganization and idled about 400 employees, the Milwaukee Business Journal reported yesterday. Three World Marketing limited liability companies on Monday filed separate chapter 11 petitions in U.S. Bankruptcy Court in Chicago. In a related matter, the chapter 11 filings scuttle plans for a Milwaukee investment group that was described in August as “an affiliate of World Marketing Inc.” to buy Bobby Kraft’s First Edge Solutions out of receivership, said First Edge and World Marketing spokesman Josh Morby.

Investors including Ryan Kavanaugh, Relativity Media LLC 's embattled founder and chief executive, have reached a deal to retake his bankrupt Hollywood studio, leaving the troubled company's TV unit in the hands of senior lenders, Dow Jones Daily Bankruptcy Review reported today. Kavanaugh' s investor group, which also includes supermarket mogul Ron Burkle, is getting Relativity's film and music units and its stakes in its sports and education divisions. The company intends to reorganize around its remaining holdings and hopes to emerge from bankruptcy by Oct. 20. Kavanaugh will retain his position as chairman and chief executive.

Creditors of Caesars Entertainment Corp.’s casino business are heading to court on Monday to argue that the company has been bankrupt for three days longer than it acknowledges, and $468 million hangs on the outcome, Reuters reported yesterday. The battle stems from how the casino operator wound up in bankruptcy in the first place. Creditors hope to convince U.S. Bankruptcy Judge Benjamin Goldgar in Chicago that the process began on Jan. 12 in Delaware. That was the day that Appaloosa and two other hedge funds filed an involuntary bankruptcy petition against the company. Three days later, the operating unit of Caesars, which was formed by the 2008 buyout of Harrah's Entertainment, filed its own Chapter 11 in Chicago, and the Delaware judge transferred his case to Goldgar. The law allows creditors to attack certain transactions dated within 90 days before a bankruptcy filing so they can claw back cash. If the judge considers the Jan. 12 bankruptcy date valid, unsecured creditors could challenge an October deal granting Caesars' senior creditors a lien on $468 million in cash.

American Apparel Inc. filed for bankruptcy protection after posting years of losses as the clothing retailer, which fired controversial founder Dov Charney last year, seeks to reorganize debts that have ballooned to levels exceeding its assets, Bloomberg News reported today. As part of a pre-packaged chapter 11 restructuring, more than $200 million of bonds will be exchanged for stock in the reorganized company and the clothing retailer will have access to financing after its restructuring, American Apparel said in a statement. Business will continue throughout the reorganization, which was supported by 95 percent of secured lenders and may last about six months, it said. Though American Apparel has been in disarray since Charney was suspended and then fired as chief executive officer last December for alleged misconduct — claims he says are baseless — American Apparel’s financial woes stretch back longer. The chain has posted losses every year since since 2010.

A federal bankruptcy judge on Friday said that he was leaning toward approving the bankruptcy plan for Freedom Industries Inc., the company behind last year’s chemical spill in West Virginia, the Wall Street Journal reported on Saturday. The move would pave the way for thousands of people harmed by the spill to begin receiving payments. At a hearing Friday afternoon in U.S. Bankruptcy Court in Charleston, W.Va., Judge Ronald Pearson said that the various settlement and compromises in the plan, which divvies up $6.1 million between Freedom’s creditors and West Virginia residents, merited approval. But he took Freedom’s liquidation plan under advisement in order to review the final language on some minor modifications to the proposal. He said he would rule this week.

A U.S. judge on Friday rejected a plan to pay millions of dollars in bonuses to top executives of bankrupt miner Molycorp Inc., two days after GT Advanced Technologies Inc. failed to get approval of a similar plan, Reuters reported on Friday. Molycorp, which filed for bankruptcy in June, had said that the bonus plan would align executives' goals with those of its creditors to maintain the value of the rare earth miner's business. Bankruptcy Judge Christopher Sontchi ruled at a Friday hearing that some of the incentive targets amounted to payments for staying in their job. He criticized one target as "file a report and hang around." Molycorp's creditors and the United Steelworkers union opposed the plan, which could have paid up to $2.9 million in bonuses, saying it was being funded in part by idling a California mine and laying off the workforce there. On Wednesday, Bankruptcy Judge Henry Boroff, for the second time rejected former Apple Inc supplier GT's plan to pay up to $2.2 million in bonuses. "In essence, the insiders seek bonus compensation for doing a job they are already obligated to do," Boroff wrote in his opinion.

The federal judge overseeing the bankruptcy of the Archdiocese of St. Paul and Minneapolis questioned the need for more legal and other professionals to resolve the case during a court hearing yesterday, Minnesota Public Radio reported. The legal bill for the bankruptcy is already about $3.6 million. Now, the archdiocese wants a firm hired to represent sex abuse victims who might file claims against the church in the future. The estimated cost is $150,000. About 400 people filed abuse claims by an August deadline, but the archdiocese says some people could still come forward with legally viable claims of abuse that occurred before the church's bankruptcy filing and could argue they were not subject to the August cutoff. Russell Roten, an attorney representing insurers, said that a future claims representative would add some finality to the case by contemplating possible claims and seeing that funds are set aside to provide compensation. Read more.

A panel at ABI’s Winter Leadership Conference will provide further perspectives on issues surrounding diocesan bankruptcies. Click here to register for the conference. Early bird rate expires today! 

Bankrupt New York Military Academy (NYMA), a 126-year-old preparatory school on the Hudson River that counts billionaire Donald Trump among its graduates, was sold yesterday after a bidding war between groups backed by two China-based investors, Reuters reported yesterday. The winning bid of $15.83 million came from the non-profit group Research Center on Natural Conservation, backed by a principal of China-based SouFun Holdings Ltd. They beat out California-based Global Preparatory Academies, which was funded by other Chinese investors, NYMA's lawyer Lewis Wrobel told Reuters. NYMA, located in Cornwall, New York, owed approximately $11.5 million to $12 million to creditors, principally local real estate firm Cornwall Improvement, Wrobel said.