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More than 90 percent of the claims submitted for compensation related to General Motors Co.'s faulty ignition switches were rejected by lawyers hired to handle the claims, Dow Jones Daily Bankruptcy Review reported today. As of Friday, the compensation fund led by lawyer Kenneth Feinberg had processed all 4,343 claims and determined that only 399 were eligible for compensation. Those included 124 claims involving deaths and 17 involving paralyzation, double amputation, brain damage or pervasive burns. Another 258 claims were approved for injuries requiring hospitalization within 48 hours of the accident. GM recalled 2.6 million older vehicle last year over a defective switch that could move out of the run position, shutting off key safety features and threatening the lives of occupants. The defect has been linked to more than 100 deaths. The U.S. Justice Department is unlikely to charge General Motors Co. with bankruptcy fraud, the Wall Street Journal reported last month, closing off one avenue for bringing a criminal case against the auto maker over a deadly ignition-switch defect. Read more. (Subscription required.) 

For more on litigation and liquidation trusts, be sure to pick up a copy of ABI’s A Practitioner's Guide to Liquidation and Litigation Trusts. 

The Diocese of Gallup’s assets are “virtually non-existent” and insurance coverage is “extremely limited” for settling the diocese’s chapter 11 bankruptcy case, an attorney for an insurance company said in court records, the Albuquerque (N.M.) Journal reported today. At least 17 of the 57 sexual abuse claims filed in the case predate 1965, when the Diocese of Gallup had no insurance coverage, attorneys said in motions. The company that insured the diocese from 1965 to 1977, Home Insurance Co., is insolvent and went into liquidation proceedings in 2003. The 25 sexual abuse claims that date to that period are now covered by New Mexico Property and Casualty Guaranty Association, which was created by New Mexico state law in 1978 to cover insurance policies issued by defunct companies. But by state law, claims against the Guaranty Association are capped at $100,000 each, said John Franchini, the state’s insurance superintendent. Meanwhile, legal and professional costs in the bankruptcy case have mounted to more than $2.6 million through June 30, court records show. 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. 

The creditors committee in the Archdiocese of Milwaukee bankruptcy is challenging the terms of the $21 million settlement announced by Archbishop Jerome Listecki last week, saying that the church excluded about 73 victims who committee members believed would be compensated when they agreed to the deal, its chairman said Monday, the Milwaukee Journal Sentinel reported today. Charles Linneman, who heads the five-member committee, said that members understood that the only survivors who would not be compensated were those who had received prior cash settlements from the church — about 84 people. That contradicts the statement issued by the archdiocese last week that 157 individuals would not be compensated. Frank LoCoco, lead attorney for the archdiocese, said it is in talks with plaintiffs' attorneys to determine how their clients will be treated under the plan, which is scheduled to be filed Aug. 24. He said some of the 157 who were deemed to receive no cash payment could be compensated as a result. 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.

The Archdiocese of Milwaukee announced yesterday that it has agreed to pay $21 million to compensate victims of childhood sexual abuse — a deal that clears the way for it to emerge from its nearly 5-year-old bankruptcy, the Milwaukee Journal Sentinel reported today. Under the terms of the agreement, 330 of the estimated 570 men and women who filed sex abuse claims in the bankruptcy would receive financial settlements of varying amounts, to be determined by an administrator appointed by the bankruptcy court. The $21 million far exceeds the $4 million the archdiocese offered victims as part of its initial reorganization plan filed in February 2014. And it more than doubles the number of survivors who will be compensated. A revised reorganization plan is scheduled to be filed Aug. 24. 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.

Delaware, the most popular state for corporate registrations, has challengers who say that it doesn’t offer enough protections against shareholder lawsuits, the Wall Street Journal reported today. Like thousands of U.S. companies, Dole Food Co. was attracted by the Delaware’s business-friendly reputation: Managers enjoy broad latitude in day-to-day operations, from corporate spending to buyouts. Firms are shielded by tough antitakeover laws. And special business courts, widely considered the most sophisticated in the nation, have over the decades blessed new corporate defenses and set clear rules for the rough-and-tumble merger world. However, Dole is one of several companies that say the state has become less hospitable toward business. Among their gripes: a growing tide of shareholder litigation, which some feel the state hasn’t done enough to curb. One new measure bars companies from shifting their legal fees to shareholders who sue and lose — a boon to would-be plaintiffs.

A federal judge yesterday rejected the request of abuse victims to extend a deadline for bankruptcy court claims against the Archdiocese of St. Paul and Minneapolis as the deadline will remain Monday, MPRNews.org reported yesterday. The creditors’ committee in the archdiocese bankruptcy case, composed entirely of clergy sex abuse victims, had wanted Bankruptcy Judge Robert Kressel to push the deadline back to May 2016, contending that the archdiocese had provided inadequate notice of the Aug. 3 deadline and that victims might need more time to file. The panel also argued that pushing back the deadline would expedite a settlement and provide more insurance money for abuse victims. As of late Wednesday, more than 400 creditors had filed claims. Abuse victims accounted for more than 250 of them. The judge said extensive notice of the cut-off date had been given by the archdiocese and through the media and other channels.

U.S. Attorney Preet Bharara prevailed yesterday in persuading the Justice Department to ask the Supreme Court to review an appellate court ruling that sharply narrowed the definition of insider trading, the New York Times reported today. Donald B. Verrilli Jr., the solicitor general, filed a petition with the court asking the justices to examine the ruling by a three-judge appeals panel in December that overturned the convictions of two hedge fund managers, Anthony Chiasson and Todd Newman. Bharara has argued for months that the ruling will make it more difficult for federal prosecutors to pursue insider trading cases in the future and could open the door to more rogue trading on Wall Street. In his petition, the solicitor general said that the appellate decision “unjustifiably impedes the government’s ability to restrain and punish” those who provide confidential tips and those who benefit from them. The ruling, Verrilli said, will “hurt market participants, disadvantage scrupulous market analysts and impair the government’s ability to protect the fairness and integrity of the securities markets.”

Former investors in the railway behind a deadly 2013 train derailment face a demand to return nearly $14 million in allegedly improper dividends on the grounds that the company was in financial trouble years before its bankruptcy filing, Dow Jones Daily Bankruptcy Review reported today. The bankruptcy trustee winding down the Montreal, Maine & Atlantic Railway Ltd. on Monday brought a lawsuit against the investors, which court papers show include a company with ties to the railway's former chairman. The lawsuit aims to show how, years before the accident that claimed 47 lives and partially destroyed a small Quebec town, the railway was in financial distress.

Once Fiat Chrysler Automobiles admitted to widespread violations of vehicle safety laws, regulators decided to get creative in their punishment, the New York Times reported today. First and foremost was a cash fine of $70 million against the company — equal to the largest penalty ever imposed by the National Highway Traffic Safety Administration — for failing to execute 23 recalls covering 11 million vehicles. But the additional actions taken by the agency in its consent order with Fiat Chrysler broke some new ground in the government’s efforts to stamp out shoddy safety practices by automakers. The consent order, which was signed on Friday by Fiat Chrysler and government officials and released on Sunday, calls for the automaker to buy back hundreds of thousands of defective vehicles, and pay consumers $100 just to participate in a recall of Jeeps equipped with fire-prone gas tanks. Regulators also forced the automaker to give broad authority to an independent monitor to oversee its safety operations for at least three years, and required it to fund educational programs on vehicle recalls for consumers, suppliers and other automakers.

Federal regulators hit Fiat Chrysler Automobiles NV with a record $105 million fine for recall lapses covering millions of vehicles, adding to mounting scrutiny of the automaker’s safety practices, the Wall Street Journal reported today. The National Highway Traffic Safety Administration slapped the Italian-U.S. company with the financial penalty and assigned an independent monitor to audit the company’s recall processes for up to four years as part of a sweeping settlement unveiled Sunday evening. In some cases, the automaker agreed to repurchase recalled automobiles as part of the deal, including more than half a million with defective suspension parts that can cause the vehicle to lose control.