%1

A bankruptcy judge said that he will rule on Friday whether to allow the owner of the Trump Taj Mahal casino in Atlantic City, New Jersey to shed its labor pact in order to clinch a $100 million rescue deal with billionaire Carl Icahn, Reuters reported yesterday. Parent company Trump Entertainment Resorts Inc. has said that trimming $14.6 million from its annual union pension and health care costs is key to save the casino from becoming the fifth to close this year in the seaside resort. Bankruptcy Judge Kevin Gross said that he would read his ruling during a teleconference at 3 p.m. EDT on Friday. Atlantic City has lost thousands of jobs this year and Trump Entertainment has warned it could be forced to begin winding down the Taj Mahal operations as soon as next week.

U.S. Steel Canada said yesterday that it has reached a tentative deal with union leaders on a contract for workers at its Hamilton Works operations in Ontario, Reuters reported yesterday. U.S. Steel Canada, a wholly owned subsidiary of parent U.S. Steel Corp, was recently granted creditor protection by the Ontario Superior Court as it attempts to restructure its operations. The terms of the tentative agreement were not disclosed and the deal remains subject to ratification by members of United Steelworkers Local 1005.

New York’s highest court weighed in yesterday on a dispute over a plan by a bankruptcy trustee to sell the rent-stabilized apartment of an 80-year-old East Village woman to her landlord, the Wall Street Journal reported today. Arguments before the Court of Appeals focused on whether such leases were considered transactions like any leases, or public benefits conferred by the state legislature that should be protected from bankruptcy court. Some judges on the Court of Appeals sharply questioned a lawyer for Mary Santiago, the East Village woman. He argued that a state law that listed exemptions from bankruptcy for “public-assistance benefits” meant to include rent-stabilized leases, though the law doesn’t specifically mention them. Several judges seemed sympathetic to another argument, raised by lawyers for Attorney General Eric Schneiderman and Mayor Bill de Blasio, that rent stabilized leases couldn’t be considered property at all, since they couldn't be legally bought and sold by tenants. Under a bankruptcy court ruling, Santiago would have been permitted to live in her apartment at the same rent for the rest of her life but would give up the right to pass the apartment to her son. Santiago appealed. The state court was asked by the Second U.S. Circuit Court of Appeals to step in and examine the state law setting exemptions for state residents from bankruptcy.

Energy Future Holdings Corp. is trying to establish a bidding and sale process that locks in the structure of a reorganization plan and produces “catastrophic” results for the unregulated power plants, creditors of the generation side of the company said in court filings at the end of last week, Bloomberg News reported yesterday. The objections come from senior noteholders of the generation business and the official creditors’ committee representing that side of the company. The bankruptcy judge in Delaware will lay down auction rules at an Oct. 17 hearing. Two factions epitomize the divergent views about how the bankruptcy reorganization, which began in April, should proceed. The holding company and creditors of the Oncor electric distribution business want a structure that avoids what they say would be a potential $7 billion tax liability. Avoiding taxes resulting from a sale requires a tax-free spinoff of the generation business, but creditors of the generation business say that the tax-free structure would deprive them of a stepped up basis in the assets that they would receive. In turn, the lack of a higher basis would mean the loss of billions of dollars of potential value in the generation business.

A plan by cooperative food distributor Associated Wholesalers Inc. to pay executives more than half a million dollars in bonuses has met the resistance of a federal bankruptcy watchdog, who says that the extra pay doesn't require enough work on the part of the employees, Dow Jones Daily Bankruptcy Review reported today. Associated Wholesalers proposes paying 12 members of senior management $246,254 for staying with the company until it is sold. Another $320,186 has been set aside to pay 15 senior managers if the company meets or exceeds certain financial projections. U.S. Trustee Roberta DeAngelis took issue with the bonuses in a filing on Friday, saying that both plans fail to meet the standards outlined in federal bankruptcy laws.

GT Advanced Technologies Inc. asked for bankruptcy court permission to shut down its synthetic-sapphire operations, citing terms of a contract with Apple Inc. that it called “oppressive” and “burdensome,” Bloomberg News reported on Friday. GT Advanced, based in Merrimack, N.H., filed for bankruptcy last week, less than a year after announcing an agreement to supply sapphire to Apple. The substance is used to make screens on mobile devices more durable. The company told the court on Friday that it was going through cash too fast and must halt operations in Mesa, Arizona, and Salem, Massachusetts, by Dec. 31, at a cost of 890 jobs.

Roger Dean Gillispie, a former General Motors security guard, spent 20 years in an Ohio prison for rape until a federal court ordered him released in 2011. Now he wants to sue GM for allegedly helping to frame him, and he’s getting support from an unlikely source: hedge funds, according to a Reuters analysis yesterday. Gillispie, who is waiting to see if he will face a new criminal trial, has petitioned the U.S. Bankruptcy Court in New York for permission to sue GM. The court, which is overseeing claims against the company in the wake of its 2009 chapter 11 reorganization, must decide if Gillispie can seek damages from so-called New GM, the profitable company that emerged from bankruptcy, or must go after Old GM, which is a trust composed of limited assets to settle past claims against the carmaker. He is making essentially the same argument as owners of older cars recalled in GM's ignition-switch debacle this year, who have filed more than 100 lawsuits seeking class action status and want permission from the bankruptcy court to pursue deep-pocketed New GM. Under the 2009 bankruptcy agreement, New GM is largely shielded from liabilities arising before it was created. Gillispie and the car owners argue they could not have known about key facts central to their cases before the GM bankruptcy and should be able to sue the new company. Hedge funds with claims on the Old GM assets also prefer new claimants direct their claims toward New GM.

LightSquared wants its bankruptcy judge to halt Philip Falcone's lawsuits against the global positioning systems industry and the U.S. government until after LightSquared is out of bankruptcy, Dow Jones Daily Bankruptcy Review reported today. In a bankruptcy court filing on Wednesday, LightSquared said that the bankruptcy court has the power to stop these suits filed by Falcone's Harbinger Capital Partners, which currently controls LightSquared's equity. The money Harbinger is going after, LightSquared said, is actually money that could also belong to the LightSquared estate.

The union for more than 1,100 workers at Atlantic City, N.J.’s Trump Taj Mahal casino who are rallying to save their health-care and pension benefits are now fighting in two places: in the courtroom and on the streets, the Wall Street Journal reported today. Several hundred protesters plan to block a major traffic intersection near the Atlantic City Expressway yesterday to draw attention to pressure that workers who are unionized through Unite Here Local 54 face, said union spokesman Ben Begleiter. Billionaire Carl Icahn promised to take over the struggling casino, whose owner filed for bankruptcy last month and put $100 million into its operations. But that offer stands only if casino officials can deliver about $15 million worth of cuts from workers and property tax relief from Atlantic City. Casino officials want to stop contributing money to worker pensions and to end their health care coverage.

Giants Stadium LLC is urging a judge to allow $600 million-plus in claims against Lehman Brothers Holdings Inc. related to interest-rate swaps used to finance the East Rutherford, N.J., football stadium, Dow Jones Daily Bankruptcy Review. In a partially redacted filing in bankruptcy court on Tuesday, lawyers for holders of claims once owned by the New York Giants football team said that Lehman's argument that the entity actually owes Lehman money is wrong. "Giants Stadium properly terminated the swaps and reasonably calculated its loss," lawyers for the entity said in the filing. Lehman, which is suing the Giants Stadium entity for $100 million saying that it is actually the one owed money, declined to comment.