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The Puerto Rico Electric Power Authority may miss a January interest payment to investors, according to Municipal Market Advisors, potentially triggering the largest restructuring ever of state and local debt, Bloomberg News reported yesterday. The agency, called Prepa, used $41.6 million of reserve funds to help make a $417.6 million payment to bondholders on July 1. With the reserve now depleted by about 10 percent, “we expect the bond trustee is unlikely to make any more distributions to bondholders, reserving cash for likely litigation expenses,” Matt Fabian, a managing director at Concord, Massachusetts-based MMA wrote today in a report. The next payment is due Jan. 1, according to Fabian. While a new law aims to restructure some Puerto Rico public-corporation debt outside of a bankruptcy filing, Prepa’s $8.6 billion alone exceeds the $8 billion of general obligations and water-and-sewer debt in Detroit’s record bankruptcy and Jefferson County, Alabama’s $4.2 billion failure.

The Houston Rockets and the Houston Astros need a new owner for the struggling television channel that broadcasts their games, and they want to keep the names of potential purchasers a secret for now, the Wall Street Journal reported today. In a request filed in bankruptcy court, officials teams asked a bankruptcy judge for permission to withhold the identity of potential buyers for Comcast SportsNet Houston from several members of the channel's board of directors. Comcast SportsNet Houston broadcasts games for two Houston professional sports teams — Major League Baseball's Astros and the National Basketball Association's Rockets — to only about 40 percent of Houston households. The network is available to Comcast Corp. subscribers but has had trouble persuading competitors such as DirecTV and Dish Network Corp. to carry the network in exchange for subscriber fees, which some have said are too high. Before the network's bankruptcy in September, Astros owner Jim Crane blamed Comcast, which manages the network, for failing to bring new deals to the table. But when Judge Marvin Isgur gave Crane and Rockets officials several months to ink new deals themselves, they weren't able to sign any major partners.

Philip Falcone’s LightSquared Inc. settled a fight with Dish Network Corp. Chairman Charles Ergen over more than $1 billion in debt he holds in the bankrupt wireless broadband company, taking it one step closer to exiting court protection, Bloomberg News reported yesterday. Details of a new chapter 11 plan will be filed within a week, Joshua Sussberg, a lawyer for a special committee of LightSquared, told Bankruptcy Judge Shelley Chapman at a court hearing yesterday. A dispute between the company and Ergen, its one-time suitor, scuttled a prior plan to reorganize. The deal with Ergen, which has yet to be completed, “will alleviate a significant burden and execution risk around the plan,” Sussberg said.

Philip Falcone’s Harbinger Capital Partners LLC filed a $2 billion lawsuit against the U.S., two years after the Federal Communications Commission refused to approve the wireless broadband service of his now-bankrupt LightSquared Inc., Bloomberg News reported on Saturday. The U.S. reneged on a March 2010 commitment under which Harbinger agreed to invest billions of dollars to build a network to government specifications, the New York-based investment firm said in a complaint yesterday in the U.S. Court of Federal Claims in Washington. LightSquared filed for bankruptcy in 2012 after the FCC declined to approve its service, saying that it might interfere with global positioning systems. Harbinger, which controls LightSquared for now, is seeking recovery of its $1.9 billion investment, along with unspecified damages, according to a copy of the complaint provided by a lawyer for Harbinger.

When Freedom Industries Inc. sought chapter 11 protection shortly after chemicals leaked from its storage tank into a river, it was expected to face an onslaught of bankruptcy claims from the 300,000 some West Virginians whose water supply was contaminated as a result of the spill, the Wall Street Journal reported today. But as of July 3, just 70 claims were on file in Freedom’s bankruptcy case, court papers show, despite a broad campaign to advertise the Aug. 1 deadline by which individuals and businesses affected by the spill must stake their claims for compensation from Freedom, which has shut down since entering chapter 11. With the deadline fast approaching, the Charleston, W.Va., bankruptcy court this week authorized additional advertisements targeting the areas hit hardest by the spill — the West Virginia counties of Kanawha, Boone and Putnam. James W. Lane Jr., as the court-appointed official in charge of gathering claims, will lead the charge. In court papers, he said he plans to not only continue advertising in local newspapers, at a cost of up to $5,000 but also hit the radio waves. He’s aiming to broadcast 30-second ads with information on how to file claims, with 60 ads running per week for two to three weeks at a cost of up to $5,300.

The debtors in the Garlock Sealing Technologies bankruptcy proceeding have filed a heavily redacted opposition to reopening the sealed record of 2013’s estimation hearing that led to only $125 million being placed in a trust for asbestos claimants, the Washington Examiner reported today. The company’s asbestos personal injury claimants’ committee has asked a bankruptcy judge to reopen the record, claiming the debtors misled and committed a fraud upon the court. The debtors claim that the arguments presented by the committee in its motion provide no sound reason for reopening the estimation record as most arguments have already been rejected by the court. The debtors — which include Garlock, Garrison Litigation Management Group and The Anchor Packing Company — filed their opposition on July 3 in the U.S. Bankruptcy Court for the Western District of North Carolina. The action arises out of Judge George Hodges’ Jan. 10 bankruptcy ruling in favor of Garlock, ordering the gasket manufacturer to put $125 million in an asbestos trust — roughly $1 billion less than what plaintiffs’ representatives felt was proper. In his decision, Hodges noted how attorneys had been withholding evidence while pursuing claims against Garlock.

Harbinger Capital Partners has sued Dish Network Corp. and its Chairman Charles Ergen, seeking at least $1.5 billion for allegedly trying to strip the hedge fund of its control of bankrupt wireless company LightSquared, Reuters reported yesterday. The lawsuit filed in a Colorado federal court on Tuesday accused Ergen of engaging in fraud and of violating a federal anti-racketeering law, according to court documents. Harbinger controls LightSquared, which has been mired in chapter 11 bankruptcy since 2012, and Ergen is LightSquared's largest creditor.

A federal judge yesterday rejected PricewaterhouseCoopers' request to dismiss a $1 billion lawsuit accusing the auditor of providing bad accounting advice that contributed to the October 2011 collapse of MF Global Holdings Ltd., a brokerage run by former New Jersey Governor Jon Corzine, Reuters reported yesterday. U.S. District Judge Victor Marrero rejected PwC's argument that the MF Global's bankruptcy plan administrator, which brought the lawsuit, "stands in the shoes" of the company under the “in pari delicto” legal doctrine, and cannot recover because Corzine and other officials were also to blame for the collapse. Judge Marrero has yet to review other PwC arguments for dismissal, including that the administrator had no authority to sue and did not show that the accounting advice was a "proximate" cause of MF Global's bankruptcy.

The liquidating trustee of defunct law firm Dewey & LeBoeuf is arguing his clawback suit against two former firm leaders should not be stayed while they face criminal charges because there is little overlap between the criminal and bankruptcy cases — and because every delay diminishes recovery for creditors, the New York Law Journal reported today. "The trustee's urgency in pursuing these claims is heightened by the real risk that [Joel Sanders and Stephen DiCarmine's] assets will dry up while they scramble to defend themselves against the criminal charges and other potential lawsuits," trustee Alan Jacobs said in papers filed July 4 in Southern District Bankruptcy Court. Jacobs is seeking more than $21.8 million from Sanders, the firm's former CFO, and DiCarmine, former executive director, in Jacobs v. DiCarmine, 13-01765. Jacobs claims that the former executives' employment contracts awarded them exorbitant compensation that required nothing in return.

A handful of new lawsuits seek to recover more than $1.5 million for defunct brokerage Peregrine Financial Group Inc.'s creditors from the likes of CNBC, MTV and various charitable organizations, Dow Jones Daily Bankruptcy Review reported today. Ira Bodenstein, the trustee leading Peregrine's bankruptcy liquidation, filed the lawsuits against corporate defendants, a university, several nonprofits and two individuals, court papers show. The lawsuits seek to recover funds the defendants received from Peregrine in the months before the brokerage's July 2012 collapse, which was brought on by the exposure of its founder's fraud.