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Bankruptcy Judge Robert Drain ruled yesterday that senior bondholders of bankrupt Momentive Performance Materials cannot change their votes to accept the quartz and silicone maker's proposed restructuring, Reuters reported yesterday. Knocking down what he viewed as an effort to avoid a less desirable payout, Judge Drain denied the bondholders' request to switch their votes. Waterford, N.Y.-based Momentive, owned by Apollo Global Management, filed for protection under chapter 11 protection in April with a contentious proposal to cut $3 billion in debt and transfer control to a class of junior bondholders that also included Apollo. The offer by senior bondholders to change their votes met with resistance from Momentive, which viewed the shift as an effort to avoid repayment in the form of a long-term note, rather than cash.

Giants Stadium LLC, an entity created by the New York football team to finance a new stadium during the financial crisis, sued Lehman Brothers Holdings Inc. seeking payment of a $301.8 million bankruptcy claim, Bloomberg News reported yesterday. The defunct lender and one of its affiliates breached a 2007 swap agreement tied to the stadium’s financing when Lehman failed to pay the owed amount on Oct. 2, 2008, about two weeks after the bank collapsed, Giants Stadium said in a filing yesterday in bankruptcy court. The claim was made in response to a lawsuit filed by Lehman against Giants Stadium in October seeking about $100 million for early termination of interest-rate swap transactions when the investment bank filed for bankruptcy. Each side says that the other defaulted on the deals, according to court papers.

First BanCorp Puerto Rico wants a quick win in a fight with Lehman Brothers Inc., arguing that its $63.5 million claim relating to an old swap agreement should be paid in full as a "customer" claim against the Lehman brokerage, the Wall Street Journal reported today. Lawyers for First BanCorp in a Friday court filing pressed their case that because Lehman's brokerage maintained a "securities account" for First BanCorp, the swap agreement technically makes the bank a Lehman customer. "FirstBank entrusted its securities to LBI for safekeeping in its role as securities intermediary, and LBI treated FirstBank as the owner of those securities at all times," lawyers for FirstBancorp said in their filing. James W. Giddens, the trustee unwinding Lehman's brokerage, is also asking for a quick ruling in his favor over the claim or asking for it to be expunged completely. Giddens said in court filings last month that if First BanCorp has a claim in the case at all, it isn't with the brokerage unit but rather with a Lehman derivatives unit, Lehman Brothers Specialty Finance.

A federal bankruptcy judge is becoming increasing concerned that Freedom Industries may abandon its former Elk River chemical storage facility without completing a proper environmental cleanup of the site of the January chemical spill that contaminated the drinking water supply for hundreds of thousands of residents across the region, the Charleston (W. Va.) Gazette reported today. Bankruptcy Judge Ronald Pearson says that the Freedom bankruptcy proceeding has not progressed adequately, and that too much of the company’s limited cash is being earmarked for attorneys, perhaps leaving inadequate funds to complete remediation required by existing enforcement orders from the state Department of Environmental Protection. In a seven-page order filed on Friday, Judge Pearson said recent bankruptcy case filings by Freedom’s lawyers cause him “to fear [Freedom] is not sufficiently committed to compliance with the demolition and cleanup orders of the” DEP or “other agencies of the state and federal government.” Judge Pearson cited language in Freedom’s proposed plan for liquidating the company stating that, while efforts “will be undertaken to remediate the site,” there are “financial limitations” to what Freedom “can viably undertake by way of compliance with” the remediation plan for its Etowah Terminal, site of the Jan. 9 leak of Crude MCHM and other chemicals into the Elk River.

Bankruptcy Judge Robert Drain’s ruling on Aug. 26 in the unrelated bankruptcy of chemical maker Momentive Performance Materials could end Energy Future's $1 billion battle with creditors and reinvigorate its restructuring, Reuters reported on Friday. The two cases are linked by disputes over “make-whole” provisions in bond contracts. Make-wholes are an early redemption payment to bondholders to compensate them for the loss of anticipated interest. Bondholders have become increasingly willing to fight for the make-whole payments in recent bankruptcies such as American Airlines in part because there are few places to invest their money to earn above-market returns given the current low-rate landscape. Energy Future filed one of the largest corporate bankruptcies in U.S. history in April with a plan that was premised in part on refinancing high-coupon secured bonds. Bondholders sued, arguing that the company was wrongfully denying them $1 billion in make-whole payments. Momentive proposed a plan that had similar elements, and last week Judge Drain swept aside objections from bondholders.
http://www.reuters.com/article/2014/09/05/us-energy-future-bankruptcy-a…

For further analysis of “make-whole” provisions and the effect of the Momentive Performance Materials decision, be sure to sign up for tomorrow’s abiLIVE webinar, “Understanding Make-Whole and No-Call Provisions: Key Takeaways from Recent Decisions.”
http://www.abiworld.org/webinars/2014/0909Web/index.html

A bankruptcy judge has cleared a crucial settlement between the victims of Scott Rothstein's $1 billion-plus Ponzi scheme and creditors of his law firm, blessing a deal that will put money in both groups' pockets, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Raymond B. Ray on Tuesday approved the settlement, calling it an "exceedingly fair" way to resolve the two groups' battle over the fruits of Rothstein's fraud. Since Rothstein's arrest and the bankruptcy filing of his Florida law firm in late 2009, prosecutors and bankruptcy lawyers have battled over whether Rothstein's luxury cars, watercraft, jewelry, cash, real estate and other assets were his personal property or property of the law firm.

Four former Dewey & LeBoeuf executives filed new motions late last week asking the New York State Supreme Court to throw out charges of grand larceny and fraud linked to the firm’s 2012 collapse, claiming that Manhattan prosecutors failed to produce evidence of criminal intent and incorrectly instructed a grand jury about accounting rules the men are accused of abusing, the American Law Journal reported today. Dewey’s former chairman Steven Davis, former executive director Stephen DiCarmine, former chief financial officer Joel Sanders and former client relations manager Zachary Warren filed their motions on Friday following the Manhattan District Attorney’s response to their previous motions to dismiss the indictment. Lawyers for Davis, DiCarmine and Sanders wrote that “despite somewhere between one and two million emails and apparently almost 4,000 pages of grand jury testimony, the prosecutors and the grand jury have no direct evidence of these defendants’ larcenous intent.”

The administrator for the now-defunct Coudert Brothers LLP can’t seek fees earned from former partners who now work at other firms, a federal appeals court in New York held, Bloomberg News reported today. The U.S. Court of Appeals for the Second Circuit yesterday reversed a ruling by U.S. District Judge Colleen McMahon, who had found that “the uncompleted client matters were assets of Coudert, and as such recoverable by the bankruptcy estate.” The circuit court relied on a July 1 opinion from the New York Court of Appeals, the state’s highest court, which held that the profit on unfinished business can’t be considered the property of a firm that has filed for bankruptcy. That court made the ruling because it had surfaced in the bankruptcy of Thelen LLP as well as Coudert. The administrator, Development Specialists Inc., was seeking fees from firms including Dechert LLP, Morrison & Foerster LLP and K&L Gates LLP. The group of firms is represented by Miller & Wrubel PC.

Major League Baseball’s Houston Astros and the National Basketball Association’s Houston Rockets are fighting to cut partner Comcast Corp.’s claim for a $100 million loan to the bankrupt cable network that televises the teams’ games, Bloomberg News reported on Friday. The largest U.S. cable provider would have its claim reduced to as little as $16 million and no more than $23 million under a revised restructuring plan filed yesterday for Houston Regional Sports Network LP, which is jointly owned by the teams and Philadelphia-based Comcast. The sports network filed a plan this month to exit bankruptcy protection and ditch Comcast for AT&T Inc. and DirecTV in a deal for them to buy all of the reorganized company’s equity and sign new media rights agreements with the teams. The new media rights deals would more than double the network’s availability in its home market and more than triple affiliation-based revenue, according to the restructuring plan.

A federal judge on Wednesday ordered PricewaterhouseCoopers to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the October 2011 bankruptcy of MF Global Holdings Ltd., a brokerage run by former New Jersey Gov. Jon Corzine, Reuters reported yesterday. U.S. District Judge Victor Marrero said that PwC's advice on "repurchase-to-maturity" transactions through which Corzine bought $6.3 billion of European sovereign debt affected how MF Global implemented its strategy and in turn contributed to its alleged losses. MF Global's bankruptcy plan administrator sued PwC on March 28, accusing it of professional malpractice for having provided "flatly erroneous" accounting advice to the company. Corzine is not a defendant. Judge Marrero noted that factors such as how MF Global employees implemented Corzine's strategy might also have been major causes of the New York-based company's losses but he said a jury should sort out who was liable. The judge did dismiss breach of contract and unjust enrichment claims against PwC. The case is MF Global Holdings Ltd as Plan Administrator v. PricewaterhouseCoopers LLP, U.S. District Court, Southern District of New York, No. 14-02197.