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Montreal, Maine & Atlantic Railway Ltd.'s bankruptcy trustee is suing the owner of the crude oil its train was carrying when it derailed last summer, saying that the company's alleged negligence contributed to the accident that killed 47 people and partially destroyed a small Quebec town, the Wall Street Journal reported on Saturday. Chapter 11 trustee Robert J. Keach on Thursday filed a lawsuit in bankruptcy court against World Fuel Services Corp. of Miami and several other companies, accusing them of falsely identifying the crude oil as a low danger when in fact it was highly volatile and dangerous. Keach said that World Fuel also knew — or should have known — that the type of tank cars carrying the oil were prone to rupture upon derailment, making the cars "unsafe and unsuitable" for the transport of the crude oil. Had MM&A known of the true dangers of the crude oil, Keach said, the railway would have taken such safety measures as not leaving the train unattended and parking it on a blocked side track. Instead, he said MM&A parked the train on a main track with a slight descending grade, from which the unattended train began its ill-fated descent into the Quebec town of Lac-Mégantic early on July 6.

Subprime mortgage lender Residential Capital LLC has reached an agreement with a group of insurers that guarantees a $150 million payment — part of parent-company Ally Financial Inc .'s larger $2.1 billion contribution — to its bankruptcy estate later this year, Dow Jones Daily Bankruptcy Review reported today. Pending approval of the settlement from Bankruptcy Judge Martin Glenn, Ally will pay ResCap's creditors the first $150 million it collects from insurance carriers within 30 days of receiving those funds. The remaining $1.95 million is to be paid in cash by Sept. 30. A hearing related to the settlement is scheduled for Feb. 20.

MF Global Inc.’s trustee should be forced to account for expenses he has racked up liquidating the commodity brokerage, said a creditor that claims the case has cost more than $263 million in professional fees, Bloomberg News reported yesterday. Winding down MF Global has been proportionately more expensive than Lehman Brothers Inc.’s more complex liquidation, Knighthead Capital Management LLC said in papers filed yesterday in U.S. Bankruptcy Court in Manhattan. Knighthead said total fees for MF Global Inc. have reached $263.2 million, including attorney fees of $55.9 million. The fund seeks a Feb. 13 court hearing to demand more information about costs from James Giddens, the trustee who oversaw the liquidations of both MF Global Inc. and Lehman Brothers Inc. under the Securities Investor Protection Act.

Bankruptcy Judge James Peck approved Lehman Brothers Holdings Inc.'s settlement with Fannie Mae over $18.9 billion in mortgage claims, one last major decision as Lehman's bankruptcy judge before his retirement at the end of the week, the Wall Street Journal reported today. His last major approval, over mortgage loans and mortgage-backed securities Lehman sold Fannie in the years before the financial crisis, was apropos considering the housing industry's contribution to Lehman's demise. No one objected to the settlement. Fannie Mae, which originally said that it was owed $18.9 billion, will receive a general unsecured claim of $2.15 billion against Lehman. Bankruptcy Judge Shelley C. Chapman will be taking over the Lehman case following the retirement of Judge Peck.

Bernard Madoff victims who withdrew more money from the con man’s firm than they invested — and were slated for no recovery — asked to be excluded from JPMorgan Chase & Co.’s $543 million settlement of lawsuits over the fraud so they can sue the bank on their own, Bloomberg News reported yesterday. A group of 193 investors said in a court filing on Tuesday that the accord between JPMorgan and Irving Picard, the trustee liquidating Madoff’s defunct company, doesn’t cover “net winners.” They asked for court permission to not be part of the settlement. The group’s lawyer, Helen Davis Chaitman of Becker & Poliakoff LLP in New York, said she intends to file a new lawsuit on behalf of these and other victims who say they were harmed in Madoff’s $17 billion Ponzi scheme, even though they didn’t lose their principal.

The relatives of those killed in last summer’s train derailment in Quebec are turning to former U.S. Senator George Mitchell to make sure they get paid in the railway company’s bankruptcy, the Wall Street Journal reported today. Attorneys representing holders of wrongful death claims against Montreal, Maine & Atlantic Railway Ltd. in connection with last July’s derailment in Lac-Mégantic filed a creditor-payment plan yesterday on the railway’s behalf in bankruptcy court. Court papers show Sen. Mitchell, a Democrat who represented Maine in the U.S. Senate from 1980 to 1995, would administer the plan and lead the effort to wrap up MM&A’s chapter 11 bankruptcy following the railway’s $15.85 million sale to a unit of Fortress Investment Group LLC.

Revstone Industries LLC is suing its former chairman, George S. Hofmeister, over more than $12.9 million that the company says he transferred away for his personal use, Dow Jones Daily Bankruptcy Review reported today. Through a network of related entities, Hofmeister moved funds from Revstone often to companies that were controlled by trusts set up for his three children, according to allegations in the complaint, filed on Monday in bankruptcy court.

A top airline pilot union has signed a deal to end its dispute with former Trans World Airlines pilots who had accused the union of poorly representing them during their integration into American Airlines operations, which bought Trans World Airlines out of bankruptcy in 2001, Dow Jones Daily Bankruptcy Review reported today. The Air Line Pilots Association has agreed to pay part of a $53 million settlement reach earlier this week with TWA's roughly 2,300 former pilots, who had sued the union over the seniority they got as new American Airlines pilots.

The Archdiocese of Milwaukee filed a lawsuit on Wednesday in bankruptcy court seeking to recover more than $2.6 million in legal fees from the firm now known as OneBeacon Insurance Co., the Milwaukee Journal Sentinel reported today. On the same day, OneBeacon asked Bankruptcy Judge Susan V. Kelley to lift the automatic stay imposed by the bankruptcy on all litigation involving the archdiocese so the Wisconsin Supreme Court can decide once and for all whether the insurer is liable for the church's actions related to the sexual abuse of children. The filings come as the archdiocese is completing work on a reorganization plan that will detail how it plans to compensate creditors, including victims, and finance its continued operations. The plan is expected to include millions of dollars in legal fees.

The team winding down the remnants of Lehman Brothers Holdings Inc. has reached a far-ranging settlement resolving Fannie Mae’s $18.9 billion claim stemming from mortgage loans and mortgage-backed securities the failed investment bank sold to Fannie Mae before the financial crisis, the Wall Street Journal reported today. Lehman said yesterday that Fannie Mae would receive a general unsecured claim of $2.15 billion against its holding company’s estate. Under Lehman’s chapter 11 payment plan, Fannie would recover about 25 cents on the dollar, or about $537.5 million. In return Lehman resolves its long-running dispute with the government-backed housing giant, which had argued Lehman was on the hook for the loans, and frees up $5 billion for creditors. A bankruptcy judge had ordered Lehman to set that amount aside pending the outcome of the Fannie dispute when he approved the bank’s chapter 11 plan. In court papers, a Lehman attorney said the settlement, which requires court approval, will allow the estate to dole out an additional $400 million as part of its fifth distribution to creditors. Lehman’s New York-based holding company has already paid creditors nearly $50 billion since it officially exited bankruptcy protection in March 2012. That figure is expected to grow to more than $80 billion, Lehman said earlier this summer.