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A bankruptcy judge yesterday refused to allow Donald Trump to forge ahead with a legal fight to reclaim his luxury brand from Trump Entertainment Resorts Inc., a descendant of the Atlantic City, N.J., casino company he once led, Dow Jones Daily Bankruptcy Review reported today. "This bankruptcy case right now is at a very sensitive and critical stage," said Judge Kevin Gross in explaining his refusal to immediately lift the bar shielding Trump Entertainment from legal action while it struggles to survive under chapter 11 protection. Trump and his daughter, Ivanka, sued shortly before the company filed for bankruptcy in September, seeking to force it to stop using the Trump name.

Seven underwriters of the failed MF Global Holdings Ltd. reached a partial settlement with investors, who had filed a lawsuit in 2011 seeking to hold them and some of the brokerage's executives, including its CEO, responsible for its collapse, Reuters reported today. The proposed settlement calls for the seven underwriters to pay the plaintiffs $74 million, according to court papers filed in a New York court yesterday. The underwriters cited in the settlement are Citigroup, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Pierce, Fenner & Smith, RBS Securities and Sandler O'Neill. Once run by former Goldman Sachs co-chairman and New Jersey Governor Jon Corzine, MF Global collapsed amid worries about Corzine's $6.3 billion bet on European sovereign debt and the use of customer money to cover liquidity shortfalls. Former stockholders and bondholders, led by the Virginia Retirement System and the province of Alberta, Canada, had accused MF Global of inflating its ability to manage risk, obscuring the risks of its big bet on European sovereign debt, and improperly accounting for deferred tax assets.

Lehman Brothers Holdings Inc. dodged, for now, a bankruptcy court ruling that could have effectively barred the defunct investment bank from making further distributions to creditors, Bloomberg News reported yesterday. The estimated value of more than 209,000 residential mortgage-backed securities claims should remain capped at $5 billion, instead of being raised to $12.1 billion as requested by a group of trustees, Bankruptcy Judge Shelley Chapman ruled yesterday. There’s “pretty clear case law on this point,” she said. The ruling doesn’t resolve the issue as Judge Chapman will continue to hear arguments and expert testimony over the trustee group’s bid to value the loans using statistical sampling instead of one-by-one, as Lehman advocates. The trustees argue Lehman’s method will cost $110 million and take 41 years to complete. The streamlined process can be done in a year, they argue.

A bankruptcy judge said he won't reconsider a ruling that slashed Garlock Sealing Technologies' asbestos liability to $125 million from $1.3 billion, but plaintiffs' lawyers plan to appeal the decision, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge J. Craig Whitley denied on Tuesday the request by the official committee of asbestos personal injury claimants, which had asked the judge to consider new evidence that it said could change Garlock's liability to asbestos claimants.

The top executive charged in a chemical spill that left 300,000 people without drinking water lied about his role with the company to protect his personal wealth of nearly $8 million from lawsuits, according to an FBI affidavit, the Associated Press reported yesterday. In bankruptcy court hearings and meetings, former Freedom Industries President Gary Southern repeatedly said that he had little to do with the company before it was sold a few weeks prior to the January chemical spill. But an FBI affidavit said that Southern had overseen day-to-day operations at the chemical storage company, hired employees and executed contracts for several years, according to a complaint unsealed on Monday. Southern negotiated the sale of Freedom Industries to Chemstream Holdings Inc. just weeks before the spill, and discussed how much money would be set aside to deal with necessary repairs at the site, the complaint said. Investigators discovered holes in tanks, shoddy last-resort containment walls and other deficiencies. Southern, who has previously denied wrongdoing, faces charges of bankruptcy fraud, wire fraud and lying under oath. If convicted of all the charges, he faces up to 30 years in prison.

Victims of Bernard Madoff's Ponzi scheme may recover less money than they had hoped after a federal appeals court limited the ability of the trustee liquidating the swindler's firm to recoup "fictitious profits" and other payments from customers, Reuters reported yesterday. The U.S. Court of Appeals for the Second Circuit yesterday said that federal bankruptcy law did not let the trustee Irving Picard recoup a variety of payments that Bernard L. Madoff Investment Securities LLC made to some customers more than two years before the firm collapsed on Dec. 11, 2008. Picard has been seeking to recoup money from customers who withdrew more from their accounts than they invested. Circuit Judge Barrington Parker, however, said that allowing the sought-after "clawbacks" risked the kind of "significant market disruption" that Congress intended to avoid by adopting protections for brokerage customers in the Bankruptcy Code.
https://en-maktoob.news.yahoo.com/madoff-trustee-loses-appeal-clawbacks…

In related news, one of Bernard Madoff’s longest-serving employees was sentenced to 10 years behind bars for helping run a $17.5 billion fraud, Bloomberg News reported yesterday. Daniel Bonventre ran Madoff’s broker-dealer unit for almost 40 years after being hired in the 1960s. He’s the first of five former Madoff aides to be sentenced, following their conviction in March. The other four are scheduled to learn their fate in the coming days.

ABI’s Commission to Study the Reform of Chapter 11 unveiled hundreds of ideas yesterday for a “substantial modernization” of Chapter 11 of the U.S. Bankruptcy Code, Bloomberg News reported today. The Commission’s report followed more than two years’ research into ways to fix distressed companies, the group said in a fact sheet. They include making it easier to obtain financing during bankruptcy and creating an alternative path for small and medium-sized businesses to reorganize. The group suggests its proposal can accelerate companies’ exit from bankruptcy under chapter 11, which covers reorganizations, by adding a rule to avoid drawn-out and often expensive valuation fights between senior- and junior-ranking creditors. Lower-ranking creditors could get a chance at recovery if, after exiting chapter 11, the reorganized company’s value increases to a point where they “might have been in the money or received a greater recovery if the firm had been valued at a later date,” according to the Commission’s report.
http://www.businessweek.com/news/2014-12-08/bankruptcy-group-offers-con…

Click here to read the ABI Chapter 11 Reform Commission’s final report.
http://commission.abi.org/

To watch the ABI press conference yesterday releasing the final report, please click here.
http://commission.abi.org/

Sign up today for a special abiLIVE webinar tomorrow afternoon taking an in-depth look at the Commission’s final report.
http://www.abiworld.org/webinars/2014/1210Web/

RadioShack is confused by the mixed signals of a lender who flip-flopped to push the troubled retailer into bankruptcy, the New York Times reported today. Salus Capital — who joined Cerberus Capital Management — now claims RadioShack is in default, though the money-losing retailer yesterday made a public presentation explaining why it was not. Its contention was that it did not borrow money in October from an affiliate, which it is prevented from doing. RadioShack says that since lender Standard General owns less than 10 percent of its voting stock, it does not qualify as such. RadioShack term lenders Cerberus and now Salus on Dec. 2 claimed the company had defaulted, since Standard General qualifies as an affiliate because it owned a greater-than-10-percent company stake. If RadioShack cannot reach a deal with the two lenders, it may need to file for bankruptcy next month.

Howrey LLP 's bankruptcy trustee has reconciled with the defunct law firm's former Washington, D.C., landlord and a group of ex-partners, two of the final hurdles standing in the way of repaying Howrey's debts, Dow Jones Daily Bankruptcy Review reported today. The landlord deal, which caps Warner Investments LP's highest-priority claim at $4.5 million, "removes one of the largest impediments to the trustee's ability to work towards and propose a confirmable chapter 11 plan in this case," trustee Allan Diamond said in settlement papers filed in bankruptcy court on Wednesday.

The owner of a shopping center in Boynton Beach, Fla., filed for chapter 11 to halt a foreclosure lawsuit by a subsidiary of BBX Capital Corp. and then filed a lawsuit against its lender, the South Florida Business Journal reported today. BankAtlantic hit Grove Plaza D and owners Jack Lupo, Dale Goldstein, Brian Horowitz, Gary Axelrod and Michael Rauch with a foreclosure lawsuit in 2012. After the bank was sold, the loan was assigned to Florida Asset Resolution Group, owned by former bank parent company BBX Capital in Fort Lauderdale. The litigation concerns the 12,236-square-foot retail plaza on 1.2 acres. The interest-only mortgage was made for $2.7 million in 2008, but it has ballooned to over $5 million with the default interest rate.