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The bankruptcy judge for Baha Mar Ltd. on Friday outlined two possible middle-ground rulings on whether to dismiss the resort developer’s bankruptcy case and said he would present his decision as soon as possible, likely next month, the Wall Street Journal reported on Saturday. Bankruptcy Judge Kevin Carey heard arguments Friday on motions from two Chinese national companies — its lender, the Export-Import Bank of China, and its contractor, a China State Engineering Corp. subsidiary called China Construction America — that want the case decided in Bahamian court. Judge Carey presented two possible alternatives to a simple confirmation or denial during the hearing: allowing the case to continue but requiring the Bahamian court to approve the bankruptcy plan as a stipulation for its confirmation, and suspending the proceeding rather than dismissing it outright. As he considers his decision, Judge Carey urged the parties to return to negotiations.

A Rhode Island Superior Court hearing today holds out the promise that information on how the 38 Studios loan debacle came about, as Judge Michael A. Silverstein will hear arguments on whether to release some documents long under seal in the case, the Providence Journal reported today. Those documents, possibly including depositions by former Governor Donald Carcieri and former House Speaker Gordon Fox, could go a long way toward answering the lingering questions about why state leaders decided to craft a $75-million loan guaranty in 2010 to draw the video game company from Maynard, Mass., to Providence. The company's failure in June 2012, after loan reserve funds were depleted, left state taxpayers to cover $89 million in principal and interest payments on bonds sold to fund the 38 Studios move.

Freedom Industries Inc., the company behind a chemical spill that contaminated the water supply of 300,000 West Virginians last year, will soon ask creditors to vote on its debt-payment plan after resolving an issue related to the cleanup, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Ronald Pearson on Wednesday signed off on the company's disclosure statement that will be sent to creditors along with other voting materials. All voting materials, including ballots, require bankruptcy court approval before being sent to creditors. Votes are due Sept. 28, with a final hearing on the plan scheduled to follow Oct. 2.

U.S. District Judge Shira A. Scheindlin yesterday said that Caesars Entertainment Corp. and a group of bondholders should prepare for a trial in a lawsuit over Caesars’ guarantees of billions of dollars of its operating unit’s debt, the Wall Street Journal reported today. Judge Scheindlin said that a dispute exists as to whether a series of asset-shuffling deals last year constituted an out-of-court debt reorganization that harmed the holders of more than $6 billion in bond debt issued by Caesars Entertainment Operating Co. Bondholder trustees BOKF NA and UMB Bank NA had asked the judge to rule on a discrete issue in the litigation: whether the alleged release of Caesars’ guarantees of its subsidiary’s debt violated the Trust Indenture Act of 1939, legislation created to protect bondholders. The bondholders had sought the ruling as part of their broader effort to force Caesars to honor the guarantees. Caesars disputes that it is on the hook and has warned that a ruling otherwise would likely cause it to follow the unit into chapter 11 protection.

Unsecured creditors have requested a bankruptcy court’s approval to begin a wide-ranging investigation into Sabine Oil & Gas Corp.’s merger with Forest Oil Corp. last year, a deal they have called “disastrous,” the Wall Street Journal reported today. The unsecured creditors’ committee said in court papers on Tuesday that the sheer size of the lawsuits that could stem from the investigation warrants “a prompt start and energetic prosecution.” The committee has sought the examination under rule 2004 of the Bankruptcy Code, which allows for investigations of issues that affect the administration of a bankruptcy case, including the debtor’s financial condition and operations.

USA Discounters Ltd. made its debut in bankruptcy court Wednesday seeking to use its lenders' cash as the retailer winds down business amid a multistate probe into its business practices, Dow Jones Daily Bankruptcy Review reported today. The Norfolk, Va., company, a retailer accused of misleading U.S. service members, filed for bankruptcy protection on Monday and plans to liquidate its remaining assets and distribute the proceeds to creditors. Bankruptcy Judge Christopher Sontchi said that USA Discounters could use its lenders' cash to pay its remaining employees who are in charge of liquidating the retailer's remaining assets. Those assets comprise $114 million in accounts receivable and seven still-open Fletcher's Jewelers stores.

A group of clergy sexual abuse victims on Tuesday called for an independent commission to investigate molestation accusations that are sealed as part of a bankruptcy case involving the Roman Catholic Archdiocese of Milwaukee, the Associated Press reported yesterday. The move comes a day after church lawyers formalized a $21 million settlement between nearly 400 abuse victims and the archdiocese. It advances a position the Survivors Network of those Abused by Priests has held for years: that church officials shouldn't be the first authorities to review clergy abuse reports. Church officials, meanwhile, have maintained that claims have been properly and transparently investigated and that they've worked to make sure children are safe. Read more. 

“Diocese and Religious Order Bankruptcies” will be a featured session at this year’s Winter Leadership Conference, happening December 3-5 at the Arizona Biltmore in Phoenix, Arizona. For more information and to register, click here. 

A bankruptcy judge has approved Corinthian Colleges Inc.’s plan to liquidate its assets, largely concluding the defunct for-profit education company’s chapter 11 bankruptcy case, the Wall Street Journal reported today. The liquidating plan sets aside more than $4 million to benefit former students in their efforts to pursue discharges of student loans incurred at Corinthian schools, including Everest, WyoTech and Heald colleges. Corinthian Colleges wound down under a chapter 11 process, giving the parties the flexibility to negotiate a fund for students that wouldn’t have been available in a chapter 7 liquidation. Under the latter circumstance, lenders in the case owed $107 million would have wound up with all of Corinthian’s remaining assets. Instead, the lenders agreed to the cash pool for students in exchange for liability releases. Scott Gautier, who represented the committee of former students, said that the student trust fund gives former students the resources to find out to what extent they’ve been harmed and pursue discharges of billions of dollars of student loans. Bankruptcy Judge Kevin Carey declined to include language requested by the California state attorney general in the plan. However, the majority of the objections to the plan were resolved consensually, and the bankruptcy estate, rather than the Corinthian entity, is released from liability in the plan.

Relativity Media LLC, the troubled maker of films including “The Fighter” and “Act of Valor,” will gain court permission to sell itself in an auction to begin with a $250 million bid by some of its pre-bankruptcy lenders, Bloomberg News reported yesterday. Bankruptcy Judge Michael Wiles said yesterday that he was preparing to approve the company’s sale request with some alterations. A court fight had pitted Ryan Kavanaugh’s film studio and senior debt holders against a more junior debt holder that had objected. Anchorage Capital Group LLC and Luxor Capital Group LP, both pre-existing lenders to Relativity through a senior term loan, are backing the $250 million offer.

USA Discounters Ltd., a retailer accused of misleading U.S. service members, filed for bankruptcy protection and plans to wind down its business, the Wall Street Journal reported today. Until recently, USA Discounters sold furniture, appliances, electronics, jewelry and other products from stores located near military bases, often financing such purchases through its own credit program. The company cited the tough retail climate, a defaulted loan and various governmental actions regarding its operations as factors for the chapter 11 filing. Last year, the retailer agreed to pay a $50,000 civil penalty to the Consumer Financial Protection Bureau and to stop charging military customers a fee to obtain certain financial protections, following an investigation by the agency. USA Discounters didn’t admit or deny any wrongdoing. The company currently faces a multi-state investigation from several attorneys general into its business practices. In the bankruptcy papers filed on Monday, USA Discounters says that it is cooperating with the probe.