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A bankruptcy trustee looking to recover money for those affected by a deadly 2013 train derailment has turned his attention to more than a dozen companies that may have played a role in the accident, Dow Jones Daily Bankruptcy Review reported today. In court filings on Thursday, Robert Keach, the trustee for train operator Montreal Maine & Atlantic Railway Ltd., said that he is seeking information from energy companies Shell Oil Co., ConocoPhillips, InCorr Energy Group and Enserco Energy Inc. to help him determine whether he can pursue legal action against the companies. Keach said that the four filings are "the tip of the iceberg" and that he is speaking with close to 20 companies that either leased tank cars to MM&A or produced the oil being transported.

Lehman Brothers Holdings Inc. is suing Raymond James Financial Inc. to recover more than $2 million it says it is owed related to an old swap agreement, the Wall Street Journal reported on Saturday. The lawsuit is part of an effort by the failed investment bank to recover funds lost when firms on the other end of complicated swap agreements terminated them in the wake of Lehman's September 2008 collapse. Lehman Brothers says that Raymond James took over Iowa Telecom's swap position in late 2008 and "took charge of the process…in order to gain a much larger financial advantage that would leave Iowa Telecom unaffected — but would directly deprive Lehman of the value of the terminated interest rate swap." Lehman Brothers says that ultimately, through a series of actions, the amount that Iowa Telecom should have paid it was instead paid to Raymond James. The lawsuit seeks to recover that amount, which is roughly $1.9 million plus interest and fees.

A bankruptcy judge in West Virginia told the company behind a disastrous chemical spill on the Elk River that it must prioritize its dwindling resources to clean up the site of the contamination while holding down its legal expenses, Dow Jones Daily Bankruptcy Review reported today. Freedom Industries Inc. was in court on Tuesday to answer "serious questions" raised by Bankruptcy Judge Ronald Pearson after the company suggested that it would walk away from the cleanup of the spill site. "We're going to have to prioritize from this point forward how we use the limited resources that are available," Judge Pearson said at the hearing on Tuesday. "I'd like to make sure that everyone in the case understands that what we're going to go do first is we're going to get things cleaned up and we're going to cover those expenses."

Nortel Networks Corp. bondholders and pensioners made their final pleas to judges in Canada and the U.S. about how to divide more than $7 billion in cash the company raised by liquidating assets, Bloomberg News reported yesterday. U.S. bondholders of the defunct phone maker urged the two judges to focus on legal precedents, regardless of the effect on 56,000 Nortel retirees in Canada and the U.K. The pensioners, who are fighting each other as well as the bondholders, asked the judges to impose a fair division that avoids the “extreme outcome” of paying 11 percent on some retiree claims and more than 100 percent to some U.S. investors. With their courtrooms linked by video, Bankruptcy Judge Kevin Gross in Wilmington, Delaware, and Frank Newbould, a judge on the Ontario Superior Court of Justice in Toronto held a three-day joint hearing. They will rule separately on how to divide the money. Judges Gross and Newbould asked the lawyers whether any parties would object if the judges decide to talk to each other about the case. Under Canadian and U.S. law, they are required to reach independent decisions.

The mediation involving the Catholic Archdiocese of Milwaukee and its creditors — aimed at bringing an end to its nearly four-year-old bankruptcy — has concluded with no agreement on compensating the church's victims of childhood sexual abuse, the archdiocese said yesterday, according to the Milwaukee Journal Sentinel. Lawyers for the archdiocese, its $60 million cemetery trust, its insurance companies, the bankruptcy creditors committee and the largest group of victims met with a mediator in Minnesota on Monday for the second time this month. The latest mediation, requested by the archdiocese, was the third failed attempt at a negotiated settlement since 2010. The failure means the parties will return to federal court for a new round of costly battles in a bankruptcy case in which legal fees have already topped $13 million. Before entering bankruptcy, the archdiocese paid at least $33 million in settlements, therapy, legal fees and other costs associated with the sex abuse crisis, according to its website. The archdiocese filed for chapter 11 in January 2011 in an effort to deal with mounting sex abuse claims, several of which were heading to court and potentially devastating legal judgments.

A bankruptcy judge Tuesday shut down an attempt by a former Dewey & LeBoeuf LLP executive to dismiss a lawsuit claiming he owes the defunct firm’s creditors $9.3 million, the Wall Street Journal reported today. Dewey’s bankruptcy trustee in March sued the executive, former Chief Operating Officer Dennis D’Alessandro, seeking the return of more than $9 million in salary, bonuses and other compensation that he received from 2008 until the firm’s 2012 collapse. In filing the suit, Dewey’s trustee, Alan Jacobs, said that the “astronomically generous” contract was atypical for the legal industry and “far above” the value of services he provided as COO. The suit seeks to recover the funds on the grounds that the payments were made while Dewey was unable to meet its other financial obligations.

Creditors opposed to Momentive Performance Materials Inc.’s bankruptcy reorganization lost a bid to keep the plan from being implemented while they challenge it, Bloomberg News reported today. U.S. District Judge Vincent Briccetti yesterday denied the creditors’ request for a stay, and also refused to let the plan opponents take their case directly to the U.S. Court of Appeals in Manhattan. This month, Apollo Global Management LLC’s Momentive Performance, a maker of silicone and quartz products, won bankruptcy court approval of a plan that cuts debt to less than $1.3 billion from about $4 billion. Yesterday’s decision is another victory for Leon Black’s Apollo, which took over the Waterford, New York-based company for $3.8 billion in 2006. Bankruptcy Judge Robert Drain had said that groups of senior creditors that originally opposed the plan weren’t allowed to change their votes at the last minute, which would have allowed them to be paid in cash rather than new debt. They and a group of low-ranking creditors, who are to get nothing under the plan, sought to keep it from being carried out while they appealed Judge Drain’s decision. Briccetti refused to put the plan on hold, saying that the challengers didn’t show a likelihood that they would succeed on their appeal. He said Judge Drain was probably correct in his treatment of the senior creditors’ claims.

Three-and-a-half years after Howrey LLP shut its doors, another 31 former partners of the bankrupt law firm have agreed to chip in money to pay back Howrey’s creditors, the Wall Street Journal reported today. In settlement papers filed in bankruptcy court on Friday, Howrey trustee Allan Diamond says that he’s reached deals to bring in close to $1.5 million from the batch of onetime equity partners. That’s on top of a nearly identical settlement reached in May with 60 ex-partners that raised $4.2 million for creditors. The contributions, ranging from $3,532 to $200,000, claw back 16 percent of what partners earned between April 2010 and Howrey’s dissolution a year later — a period during which Diamond argues Howrey was insolvent. (Subscription required.)
http://blogs.wsj.com/bankruptcy/2014/09/22/former-howrey-partners-contr…

For more on law firm bankruptcies and “unfinished business” claims, be sure to read “Is the Unfinished-Business Rule Finished? Recent Decisions Could Close the Book on Hourly Matters” in the September edition of the ABI Journal.
http://journal.abi.org/content/is-the-unfinished-business-rule-finished…

U.S. District Judge Jesse Furman on Friday ordered discovery to begin for some cases filed against General Motors Co. in connection with its recall of millions of cars for a faulty ignition switch, Reuters reported on Friday. Judge Furman said that plaintiffs could begin requesting documents from the company related to accidents, injuries and lost vehicle value linked to the switch that allegedly occurred after GM emerged from bankruptcy in 2009. Since the beginning of the year, GM has recalled nearly 15 million vehicles worldwide over potentially defective ignition switches. The company has set up a program, run by lawyer Kenneth Feinberg, to compensate victims of crashes involving about 2.6 million of those cars, mostly Cobalts, Ions and other small cars. The program has so far identified 19 deaths linked to the defect.

A lawsuit filed by the Catholic Diocese of Spokane against the lawyers who led it through a 2004 bankruptcy related to sex abuse lawsuits is set for a February trial, the Associated Press reported on Saturday. Bishop Blase Cupich stopped using the legal team at the Paine Hamblen law firm after he arrived in 2010. He has since pursued a malpractice complaint that accuses the firm of failing to use a strategy that could have saved the diocese millions of dollars and prevented a new round of priest sex-abuse claims. The Spokane Spokesman-Review reported Friday that the number of claims after the bankruptcy reached 230 in the past year. However, more than 150 of the 230 people who filed future claims had their cases rejected by a former federal judge tasked with reviewing them and awarding payouts.