%1

Capitol Bancorp Ltd. has reached a settlement with unsecured creditors that will allow the bank holding company to close on its sale to Wilbur Ross's Talmer Bancorp Inc. after months of fighting, Dow Jones Daily Bankruptcy Review reported today. With this deal, creditors have agreed to support Capitol's bankruptcy-exit plan after 99 percent of general unsecured debt and 61 percent of trust-preferred securities debt voted in mid-December to reject it. These groups are owed $20.8 million and $2.35 million, respectively.

Fisker Automotive, the bankrupt maker of a plug-in hybrid sports car, asked a federal judge to approve its proposed sale to a Hong Kong tycoon rather than a Chinese suitor that Fisker alleged was to blame for its failure, Reuters reported yesterday. A courtroom showdown is set for Jan. 10 that will determine the future of the defunct car maker, which was launched with a controversial U.S. government loan. Bankruptcy Judge Kevin Gross must decide if Fisker's business will be put to open auction or sold to an affiliate of Richard Li as the company has proposed. The hearing was originally scheduled for Friday, but was postponed one week as a major snowstorm threatened to disrupt travel throughout the eastern U.S.

A judge has ruled that former billionaire and Yellowstone Club founder Tim Blixseth is in contempt of court for selling an ocean resort in Mexico despite a court order not to sell the property that was part of bankruptcy proceedings, The Associated Press reported yesterday. A bankruptcy judge previously ordered that the Tamarindo resort was not to be sold or transferred while those proceedings were pending. Blixseth sold the hotel and condominiums in 2011 in violation of the court order, attorney Shane Coleman, who represents Yellowstone Club Liquidating Trust trustee Brian Glasser, said in a court filing. After a Dec. 23 hearing, U.S. District Judge Sam Haddon found that Blixseth was in contempt, according to court records.

The former head of Personal Communications Devices LLC who is accused of abandoning the Long Island, N.Y., mobile phone distributor as it lost ground in the smartphone era is fighting those accusations in court and has asked the company to pay for the battle, Dow Jones Newswires reported yesterday. Lawyers for Philip Christopher, who left Personal Communications Devices last year to start a competitor called AirTyme, said that he has spent "significant defense costs" while fighting off claims that he broke his duty to be loyal to the company. In recently filed court papers, Christopher's lawyers asked Bankruptcy Judge Alan S. Trust to begin spending money from the company's insurance policies, which had promised to cover legal costs of Personal Communications Devices' top executives.

Fisker Automotive Inc. founder Henrik Fisker and the hybrid carmaker’s former directors were sued by investor Atlas Capital Management LP over $2 million in losses that it allegedly suffered in the bankrupt company’s collapse, Bloomberg News reported yesterday. Fisker misled investors about its financial health by failing to disclose problems with a government loan and keeping secret a 2011 safety recall while the company raised money, according to the complaint filed on Dec. 27. Had Atlas known the truth, it “would not have purchased or otherwise acquired its Fisker securities, or, if it had purchased such securities, it would not have done so at the artificially inflated prices which it paid,” lawyers for Atlas said in the filing. Fisker, based in Anaheim, Calif., filed for bankruptcy on Nov. 22 and listed assets of as much as $500 million and debt of as much as $1 billion in court papers.

KidsPeace Corp., the operator of a psychiatric hospital and residential treatment centers for children, filed a reorganization plan that includes a settlement of $100 million in potential liability that is owed to the Pension Benefit Guarantee Corp. (PBGC), the Wall Street Journal reported today. According to the proposed reorganization plan filed in bankruptcy court last week, KidsPeace would pay PBGC $13.5 million to settle what the federal agency claims is a $100 million shortfall in its terminated pension plan. KidsPeace won a "distress termination" agreement from PBGC, which will move the duty to pay retirees off its balance sheet. The settlement pays $450,000 in cash up front to PBGC and the remaining $13.05 million will be paid with an interest-free note, under which KidsPeace will make $225,000 payments quarterly.

Advantage Rent a Car won bankruptcy court approval to settle a battle with former owner Hertz Global Holdings Inc. over leased vehicles and is now seeking to borrow more than $100 million to help build its own fleet of rental cars, the Wall Street Journal reported today. Bankruptcy Judge Edward Ellington on Thursday signed off on the settlement with Hertz, which removes a significant obstacle to Advantage's future operations and will help pave the way for its proposed sale to a Canadian private-equity firm. Federal regulators ordered Hertz to spin off Advantage in connection with its $2.3 billion acquisition of Dollar Thrifty Automotive Group Inc. Under the spinoff, Hertz agreed to lease 24,000 vehicles to Advantage but disputes arose over the agreement, prompting Advantage to seek chapter 11 protection in November, shortly after the divestiture was finalized.

W.R. Grace & Co said that it has settled the only remaining appeal for its chapter 11 plan with a group of bank lenders, paving the way for the U.S. chemicals maker to emerge out of bankruptcy protection after 12 years, Reuters reported today. The company reached a settlement with holders of its pre-petition bank debt, who have been demanding a higher interest rate on their loans, according to a court filing yesterday. Grace will pay the lender group $1.1 billion, comprising $971 million of principal and undisputed interest through Dec. 31, and $129 million in settlements, removing the last remaining obstacle to its emergence out of bankruptcy protection. Grace filed for chapter 11 protection in 2001, making it one of the longest bankruptcies in U.S. history, after an asbestos leak at one of its mines led to a slew of lawsuits.

Owners and insurers of a now-bankrupt Massachusetts pharmacy linked to a deadly meningitis outbreak have agreed to pay more than $100 million to compensate victims, families of victims and creditors, Reuters reported today. The preliminary settlement announced yesterday, which requires court approval, would resolve many claims arising from tainted steroid injections linked to New England Compounding Pharmacy Inc. of Framingham, Mass. According to the Centers for Disease Control and Prevention, at least 64 people died and 751 were sickened in 20 U.S. states by injections of methylprednisolone acetate, a drug typically used to ease back pain. The outbreak occurred after the company shipped tainted vials of the steroid to medical facilities throughout the U.S. New England Compounding Pharmacy filed for bankruptcy protection on Dec. 21, 2012, two months after shutting down as the outbreak began.

Creditors of Keywell LLC are suing the executives of the recently sold scrap-metal recycler, saying that they engaged in self-dealing that sapped the company of resources while "lining their own pockets," eventually driving the company into bankruptcy, the Wall Street Journal reported today. In a Tuesday bankruptcy court filing, Keywell's unsecured creditors' committee said that among other things, Chief Executive J. Mark Lozier, Chairman Joel D. Tauber and other executives arranged disguised equity infusions through a newly created entity from which they received "illegal" dividends. Keywell filed for chapter 11 in September, blaming the fluctuating price of nickel and slow sales. A judge last week approved private-equity firm Prophet Equity's $15.8 million purchase of the company.