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A federal district judge in Washington, D.C. on Wednesday criticized the U.S. Department of Justice’s recent agreement with General Motors Co. as “a shocking example of potentially culpable individuals not being criminally charged,” the National Law Journal reported yesterday. The Justice Department in September announced a $900 million agreement with General Motors, which was accused of concealing information about a deadly safety defect in its vehicles from U.S. regulators. No individual corporate officers were charged. U.S. District Judge Emmet Sullivan, in an opinion published on Wednesday in an unrelated white-collar criminal case involving allegations of bribery in government contracting, cited the General Motors agreement as an example of prosecutors going too easy on individual corporate wrongdoers. “Despite the fact that the reprehensible conduct of its employees resulted in the deaths of many people, the agreement merely ‘imposes on GM an independent monitor to review and assess policies, practices, and procedures relating to GM’s safety-related public statements, sharing of engineering data, and recall processes plus the payment of a $900 million fine,” Sullivan wrote.

A bankruptcy judge on Wednesday declined to order a new sale of properties belonging to the Diocese of Gallup, N.M., even though auctioneers made an “error in judgment” by turning away a newspaper reporter and a graduate student from what had been billed as a public auction last month in Albuquerque, the Albuquerque Journal reported on Thursday. Bankruptcy Judge David T. Thuma said that ordering a new auction could harm victims of sexual abuse by priests by reducing the money available to settle the diocese’s chapter 11 case. Auctions held last month in Albuquerque and Phoenix netted the diocese about $160,000 after fees were paid to real estate brokers handling the sales. As of June 30, legal and professional costs in the case had mounted to more than $2.6 million. Ordering a new auction “would cost money,” Judge Thuma said at the end of a hearing in Albuquerque. “There is a risk that ordering a new auction would harm the creditors, who are abuse victims.” Read more.

For more on diocesan bankruptcies, be sure to attend ABI's Winter Leadership Conference that will feature a panel of experts looking at issues surrounding a bankrupt diocese.

More than two years after a train laden with crude oil derailed in Canada, killing 47 people and destroying part of a small town in Quebec, a U.S. judge approved the railway’s multimillion-dollar bankruptcy-exit plan and cleared the way for victims to begin receiving payment from a $343 million fund, the Wall Street Journal reported on Saturday. Bankruptcy Judge Peter G. Cary on Friday approved Montreal, Maine & Atlantic Railway’s bankruptcy-exit plan, a day after a Canadian judge gave it conditional approval. The plan earmarks about $86 million for the families of those who died in the explosive crash in the town of Lac-Mégantic. The railway is now defunct, its assets sold off as part of the bankruptcy case, but the remnants of the company under the control of Robert Keach, the bankruptcy trustee in the U.S. case, have been working with parties on both sides of the border on a compensation plan for victims and creditors.

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! 

A bankruptcy judge yesterday authorized clergy sexual abuse victims to begin voting on a $21 million settlement with the Roman Catholic Archdiocese of Milwaukee, which seeks to lay the archdiocese's nearly five-year-old chapter 11 case to rest, Dow Jones Daily Bankruptcy Review reported today. Court records show that Bankruptcy Judge Susan Kelley approved a plain-language version of the archdiocese's chapter 11 reorganization plan, at the heart of which is the settlement. The document will be sent out for a vote by victims and other creditors. Following the vote, the plan will still require final approval from Judge Kelley at a hearing scheduled for Nov. 9.

A group representing victims of a deadly 2012 meningitis outbreak has sticker shock over the bill submitted by a bankruptcy trustee who tracked down funds to pay them, Dow Jones Daily Bankruptcy Review reported today. The plaintiffs' steering committee, which represents 322 claimants in a multidistrict case against New England Compounding Center, is asking a bankruptcy court to write down the $3.75 million fee for the services of trustee Paul D. Moore and his law firm Duane Morris LLP , saying that no one agreed to pay so much. For three years, Moore has served as the bankruptcy trustee administering the chapter 11 case of NECC, a compounding pharmacy that the Centers for Disease Control and Prevention said caused the death of at least 64 people and sickened more than 750 others with tainted steroid injections.

General Motor Co. is said to be settling a criminal probe by the U.S. Justice Department for $900 million over the ignition switch flaw that has bogged down Chief Executive Officer Mary Barra in recalls and investigations since almost Day 1 of her tenure, Bloomberg News reported yesterday. The settlement will be part of a deferred prosecution agreement. The agreement, which may be announced today, will allow the U.S. to monitor the automaker for three years. The U.S. will say that GM failed to obey federal laws requiring prompt disclosure of safety problems, and no individuals will be charged. GM will also face a charge of wire fraud.

Tom Clarke, CEO of Kissito Healthcare in Roanoke, Va., turned heads last week when his Virginia Conservation Legacy Fund said that it would acquire some of the last remaining assets of Patriot Coal Corp., subject to bankruptcy court approval, the Richmond Times-Dispatch reported on Saturday. Through a new coal company it formed, ERP Compliant Fuels LLC, Clarke’s environmental group would assume some $400 million of bankrupt Patriot’s liabilities for mine restoration and worker compensation. It would take over some closed mines and one that’s still producing, and it would keep mining coal there. Meanwhile, his group would plant millions of trees — enough to absorb 10 to 30 percent of the climate change-causing carbon dioxide that burning the coal would emit. They would get the amount certified and attach it to the coal, creating a premium product.

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.