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The judge in Sabine Oil & Gas Corporation's chapter 11 case has been asked to review what Wells Fargo, the first lien agent, is characterizing as excessive requested professionals fees totaling approximately $8.3 million incurred as part of what it describes as the "scorched earth litigation tactics" of the five professional firms involved in the lawsuit, Texas Lawyer reported today. Wells Fargo recently filed in its role as the first lien agent in Sabine Oil's case in the U.S. Bankruptcy Court for the Southern District of New York its limited objection with bankruptcy judge Shelley Chapman, related to fees incurred by committee projections in connection with the committee's investigation in the bankruptcy case. Wells Fargo stated that the committee's authority to investigate and challenge the liens and claims of the pre-petition secured parties at the expense of the debtors' estates is not unlimited. According to Wells Fargo, in accordance with standard practice in complex chapter 11 cases, the debtors and the committee agreed in a heavily negotiated final cash collateral order to a cap on the fees and expenses that can be incurred by the committee in connection with its investigation.

PricewaterhouseCoopers agreed to pay $55 million to settle a class-action lawsuit accusing it of misleading investors in feeder funds that funneled their cash to Bernard Madoff, Dow Jones Daily Bankruptcy Review reported today. The cash deal, filed in court on Wednesday, heads off a trial that would have begun this week in which investors in Fairfield Greenwich Ltd. were set to accuse PwC affiliates of negligence in connection with their work auditing Fairfield's funds, which invested with Madoff. Investors have asked a federal judge to schedule a hearing in the spring to consider the deal, reached with PwC's Canadian and Dutch units as well as with PricewaterhouseCoopers International Ltd. Read more. (Subscription required.) 

For more on fraud and Ponzi scheme cases, including analysis of the Madoff case, be sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. 

Bankrupt San Bernardino, Calif., says that it can’t afford to pay more than 100 people who have sued San Bernardino for injuries and deaths allegedly caused by its police officers and employees, the Wall Street Journal reported today. Under the city’s bankruptcy plan, the city would spend $56.5 million in the next five years to hire more officers and buy new vehicles. The plan, however, would inflict some of the deepest cuts on people who have sued over incidents of alleged police brutality or excessive force. San Bernardino’s bankruptcy plan proposes a 1 percent payment rate, though city officials promised to negotiate each lawsuit separately. Some might get insurance money, the city said, though it hasn’t provided details. San Bernardino faced 109 lawsuits seeking a total of $19 million in “personal injury and bodily injury” claims against the city and its employees as of Nov. 25. Bankruptcy Judge Meredith Jury is scheduled to review objections to the city’s bankruptcy-exit summary at a March 9 hearing. If she approves the plan, it would go to creditors for a vote.

Timothy Blixseth, former owner of the bankrupt Yellowstone Mountain Club LLC, has been jailed for almost nine months — not for a crime, but for contempt from violating a bankruptcy court injunction and subsequent district court orders, according to a report today from ABI Editor at Large Bill Rochelle. Unless the Ninth Circuit intervenes, Blixseth’s incarceration could last a year or more; District Judge Sam E. Haddon of Butte, Mont., handed down a 40-page opinion on Dec. 30 explaining why Blixseth is still in civil contempt of an order directing him to account for how he spent $13.8 million obtained from the sale of a Mexican resort in violation of a bankruptcy court order.