%1

General Motors yesterday said that it had settled a wrongful death case that was set to go to trial next month as part of ongoing litigation over the company’s defective ignition switches, the New York Times reported today. GM, the nation’s largest automaker, had already won two so-called bellwether trials being conducted to resolve a variety of legal claims tied to its recall two years ago of vehicles equipped with faulty ignitions. The settlement of the latest case was unexpected, and an indication that GM may have wanted to avoid a protracted jury trial involving a fatal accident. In a filing with the United States District Court in New York, GM said it had reached a settlement with the wife of James E. Yingling, who died in a 2013 accident in Pennsylvania while in a Saturn Ion equipped with a defective ignition. Patrick Morrissey, a GM spokesman, said the terms of the settlement were confidential.

A federal bankruptcy judge Thursday approved the sale of the Archdiocese of St. Paul and Minneapolis chancery for nearly $3.3 million, MPRNews.org reported today. Other than providing a company name, the archdiocese would not offer details about the winning bidder. State corporate records indicate the high bid came from a private firm managed by the chairman of a banking company based in Maplewood. The sale of the archdiocese headquarters and archbishop's residence on Summit Avenue brings total church property sales to more than $8 million. The judge also approved an archdiocese request to lease office space on St. Paul's east side in the one-time headquarters of 3M. It's unclear where the archbishop will reside. Archdiocese attorneys said that issue does not have to be resolved before the end of November. Attorneys said they expect to file a plan of reorganization before May 31. Until then only the archdiocese can file a plan. A plan is expected to include compensation for sex abuse victims and a financial roadmap for the continued operation of the archdiocese.

A jury yesterday declined to link what it found to be a defective ignition switch in a General Motors car to an accident on an icy New Orleans bridge, Law.com reported today. Handing a setback to plaintiffs seeking to hold GM liable for switches that can be jostled or jarred into the accessory or off position, causing a loss of power brakes and steering, jurors took less than five hours to clear the company of liability for the alleged injuries to driver Dionne Spain and passenger Lawrence Barthelemy. Spain’s 2007 Saturn Sky spun out of control and hit a Jersey barrier on the Crescent City Connection Bridge on Jan. 24, 2014. The Sky was one of a number of GM models with defective ignition switches that forced the company to issue a massive recall and pay hundreds of millions of dollars in damages.

Molycorp Inc. won court approval to exit chapter 11 protection yesterday under a plan that leaves the fate of the sole U.S. source of rare earths uncertain, the Wall Street Journal reported today. Bankruptcy Judge Christopher Sontchi confirmed a plan that puts a trimmed-down Molycorp largely in the hands of senior lender Oaktree Capital Management. Unsecured creditors will share a minority stake in the company, which is being rebuilt around the Neo line of businesses that process rare earths. As for the Mountain Pass mine in California, which is the only U.S. mine producing elements essential to electronics including cellphones and defense systems, it could be facing liquidation, or it could be targeted for a deal involving an unnamed foreign entity. The situation is “fluid,” Judge Sontchi commented during hearings in the U.S. Bankruptcy Court in Wilmington, Del. Molycorp bondholders yesterday won court approval to buy mineral rights and intellectual property associated with the facility, but are leaving the mine itself behind. To counter protests from regulators concerned Molycorp was walking away from environmental risks, the company pointed to surety bonds and the scrap value of the plant, which will help fund a cleanup.

The Illinois attorney general has asked Peabody Energy Corp. in a letter to explain how it would cover $92 million in future cleanup costs in the state if the company sought bankruptcy protection, Reuters reported yesterday. Peabody, the country's largest coal producer, said in a regulatory filing last week that it may have to seek bankruptcy protection, citing poor economies in countries that import coal and other factors weighing on the coal industry. In an emailed statement, Peabody declined to comment on the specifics of the letter but said, "We see our land restoration as an essential part of the mining process, and take great pride in the work that we do." If the company did seek bankruptcy protection, a judge would decide how to prioritize liabilities like $92 million in future cleanup costs in Illinois that are not guaranteed by cash, bonds or other securities.

Attorneys for a New Mexico diocese have submitted a proposed settlement for a bankruptcy case that has spanned more than two years, the Associated Press reported yesterday. Attorneys for the Diocese of Gallup filed a reorganization plan yesterday that would use cash contributions of $21 million from nearly a dozen sources to settle claims filed by 57 alleged victims of clerical sexual abuse. Bankruptcy Judge David Thuma will consider the proposal at a hearing next month. The plan must also be approved by the claimants. An attorney for the claimants says some terms are still being negotiated, including policies to protect children. The diocese filed for chapter 11 protection in November 2013. Read more. 

To read more about litigation or liquidation trusts in bankruptcy, be sure to pick up a copy of ABI’s A Practitioner's Guide to Liquidation and Litigation Trusts. 

The Diocese of Duluth, Minn., is expected to enter mediation this summer with representatives of dozens of alleged victims of child sexual abuse, as the parties seek to reach an amicable agreement in the diocese's ongoing bankruptcy case, the Duluth News Tribune reported today. Bankruptcy Judge Robert Kressel approved a motion to appoint Judge Gregg Zive as a mediator to work with the diocese, its insurers and attorneys representing claimants. Judge Zive was mutually recommended by the diocese and St. Paul-based Jeff Anderson and Associates, the law firm representing most of its creditors. Judge Kressel said that Judge Zive is not expected to be available until June, which places the likely start date after the May 25 deadline for abuse victims to file claims in bankruptcy court.

People suing General Motors Co. over a faulty ignition switch will get two chances in a Manhattan court this week to argue that the U.S. automaker should be held accountable for injuries, deaths and lost vehicle value, Reuters reported today. Jury selection starts today in the second trial involving a car accident allegedly caused by the switch. The defect, which some GM employees knew about for years, prompted the recall of 2.6 million vehicles in 2014 and has been linked to nearly 400 serious injuries and deaths. A first trial ended abruptly in January following allegations that the plaintiff gave misleading testimony. On Tuesday, in the same courthouse, plaintiffs suing over lost vehicle value and accidents that occurred before GM's 2009 bankruptcy will ask the U.S. Court of Appeals for the Second Circuit to reverse unfavorable decisions from a bankruptcy court last year. They say the rulings could impact many of their claims under a sale agreement that largely freed "New GM" from burdensome liabilities that predate the bankruptcy.

An attorney who filed 13 lawsuits against the Diocese of Gallup, N.M., on behalf of alleged victims of clerical sexual abuse said the disclosure of church records will be an essential part of any settlement in the diocese’s chapter 11 case, the Albuquerque Journal reported today. Robert Pastor, a Phoenix attorney, said claimants and their attorneys in the case are adamant that the diocese must release church records, including the personnel files of accused priests. Attorneys working toward a settlement told Bankruptcy Judge David Thuma last week that they intend to file a reorganization plan with the court later this month. The Diocese of Gallup in 2013 became the nation’s ninth Roman Catholic diocese to file for chapter 11 protection in response to civil lawsuits filed by alleged victims of clerical sex abuse.