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Jon Corzine lost his bid for dismissal of the U.S. Commodity Futures Trade Commission’s lawsuit over the 2011 collapse of MF Global Holdings Ltd., Bloomberg News reported yesterday. The requests of Corzine and former MF Global Assistant Treasurer Edith O’Brien to throw out the case are “without merit,” U.S. District Judge Victor Marrero said in a ruling filed Jan. 17 in Manhattan federal court. The agency alleged in its complaint that the executives violated the Commodity Exchange Act by illegally transferring funds from customer accounts. Judge Marrero said that it was too soon in the case to rule on whether the CFTC can prove its claims. “At this state of the proceedings, the court must accept the pleadings as true, and draw any reasonable inferences and resolve any ambiguities in favor of the opponent of a motion to dismiss,” Marrero wrote. MF Global, once touted by its senior officers and directors as having strong internal controls and liquidity levels, collapsed and filed for chapter 11 protection in October 2011 after making bad bets on European sovereign debt and getting margin calls.

New York law firm Proskauer Rose LLP is firing back at former client Overseas Shipholding Group, which is suing the firm for bad legal advice, saying the shipping company's own executives' "faulty" decision making and "imprudent" risk-taking led the company into bankruptcy, Dow Jones Daily Bankruptcy Review reported today. Lawyers for Proskauer said in a court filing on Friday that the firm isn't responsible for OSG's restatement of a decade's worth of financial results because its incorrect legal advice was based on key information "furnished to Proskauer by OSG that OSG knew to be false."

Dish Network Corp. said a plan to restructure LightSquared based on its now-withdrawn offer for the company's assets should be considered completely off the table despite the efforts of hedge funds to keep it alive, Dow Jones Daily Bankruptcy Review reported today. Dish's filing in bankruptcy court on Thursday comes as LightSquared continues arguing at a trial that Dish Chairman Charles Ergen improperly bought LightSquared's bank debt — the same class of debt owned by the hedge funds — on behalf of Dish. As a LightSquared competitor, Dish is prohibited from buying that debt.

Bombarded by lawsuits and under federal investigation, the chemical company that spilled a dangerous solvent into a West Virginia river and fouled the drinking water of 300,000 people filed for chapter 11 protection Friday, the Los Angeles Times reported on Saturday. Freedom Industries Inc., owner of a storage tank that ruptured Jan. 9 and spilled 7,500 gallons of a coal-treatment foaming agent called MCHM into the Elk River, sought protection from creditors under a chapter 11 filing by its parent company, Chemstream Holdings Inc. of Pennsylvania. The spill prompted the governor to order residents of nine counties in the Charleston area not to use tap water for anything but flushing toilets. In court documents, Freedom Industries says a water line break brought on by frigid temperatures may have caused "an object piercing upwards" to punch a hole in the 35,000-gallon storage tank, allowing the chemical to flow down an embankment into the river. In the filing, Freedom estimates its total liabilities and total assets at between $1 million and $10 million each. The company was founded in 1992, but has existed in its current form only since Dec. 31, when it merged with three other companies under the Freedom Industries name.

A hedge fund manager who handled debt purchases at the center of a trial over the bankruptcy of LightSquared said yesterday he did not recall whether Dish Network Corp Chairman Charles Ergen was buying the debt to influence the bankruptcy, Reuters reported yesterday. Stephen Ketchum, the head of Sound Point Capital, also testified that he could not recall how badly Ergen wanted the debt of the wireless communications company, apparently contradicting an earlier deposition and drawing a reminder from the judge that he was under oath. Ergen's motivation for buying LightSquared's debt is central to the trial, which is taking place in the U.S. bankruptcy court in Manhattan. LightSquared and its owner, Harbinger Capital Partners, accuse Ergen of improperly buying the debt as a way for Dish to take control of LightSquared's wireless broadband rights. Ergen has said he was buying the debt for his own purposes.

Some Eastman Kodak Co. shareholders who want compensation for losing their stock are heading to federal bankruptcy court this week, fighting a company objection to their claims, the Rochester Democrat & Chronicle reported today. Bankruptcy Judge Allan Gropper is scheduled to hear arguments today from various shareholders who have filed a claim against Kodak and now are objecting to the company's efforts to get those claims declared null and void. Throughout its bankruptcy and since exiting chapter 11 in September, Kodak has regularly filed objections in U.S. Bankruptcy Court, essentially saying that it doesn't owe anything to a particular party seeking money. The deadline for the last of those claims was Oct. 18. In November and December, Kodak filed a series of objections to claims with lists of hundreds of former shareholders who had filed claims asking to be compensated for their lost stock. Some of those shareholders are objecting to Kodak's objections.

Cashing in on leveraged buyouts got a little riskier this week when a bankruptcy judge weighed in on the side of the former Lyondell Chemical Co.'s creditors in a lawsuit against former shareholders, Dow Jones Daily Bankruptcy Review reported today. Judge Robert Gerber said shareholders of the company, which tanked under the weight of debt piled on in a 2007 leveraged buyout, can't take refuge in a Bankruptcy Code safe-harbor provision to escape a state-law fraud lawsuit brought on behalf of creditors left unpaid in Lyondell's chapter 11 bankruptcy.

Anadarko Petroleum Corp. said that it should pay as little as $850 million in damages over the 2005 spinoff of paint materials company Tronox Inc., 94 percent below the maximum amount a federal bankruptcy judge said it might owe, Reuters reported yesterday. The estimate was provided on Monday, one month after Bankruptcy Judge Allan Gropper said that a higher payout of $14.17 billion might be in order because Anadarko's Kerr-McGee Corp unit intended to harm Tronox creditors by saddling the spinoff with unsustainable environmental liabilities. Tronox filed for chapter 11 protection in 2009 and also sued Anadarko and Kerr-McGee, which Anadarko had bought three years earlier, claiming the spinoff was fraudulent because of the environmental liabilities.

Bankruptcy Judge George Hodges accepted the $125 million figure proposed by Garlock Sealing Technologies, cutting more than $1 billion from what the company owes to current and future victims, the Charlotte Observer reported yesterday. The amount covers claims for mesothelioma, a rare and deadly cancer of the lining of the lungs and one of a host of diseases linked to asbestos. Attorneys representing current and future mesothelioma victims had asked the court to set liability at $1.3 billion. But in his 65-page order on Friday, Judge Hodges said that the attorneys’ dollar figure did not fairly reflect Garlock’s liability. According to the U.S. Chamber Institute for Legal Reform, an industry advocacy group, Hodges’ ruling marked the first time in more than 80 asbestos bankruptcies stretching back for more than 30 years that a judge refused to accept the plaintiffs’ estimate for future claims.

A federal appeals court ruled that two former investors with Bernard Madoff cannot pursue claims against the estate of a Florida businessman who was one of the convicted swindler's biggest clients, Reuters reported yesterday. The decision by a three-judge panel of the U.S. Court of Appeals for the Second Circuit is a victory for Irving Picard, the trustee liquidating Madoff's firm, in a battle over his authority to reach settlements on behalf of victims of Madoff's Ponzi scheme. Picard reached a $7.2 billion settlement with the estate of Jeffry Picower in 2010, the largest such settlement on behalf of victims of Madoff's Ponzi scheme. The trustee has said that Picower, who drowned in 2009, knew or should have known that Madoff was operating a fraud. About $5 billion was to go to the estate of Bernard L. Madoff Investment Securities LLC and $2.2 billion was to be forfeited to the U.S. government. Picower's widow at the time said she "absolutely confident" her husband was not complicit.