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Jon Corzine was sued yesterday by the bankruptcy trustee liquidating MF Global Holdings Ltd., who accused the former chief executive of negligently pursuing a high-risk business strategy that culminated in the commodities brokerage's destruction, Reuters reported yesterday. The trustee, Louis Freeh, said in the lawsuit that Corzine and two top deputies overhauled MF Global's business without addressing "systemic weaknesses" in oversight and monitoring. Freeh said that the officials breached their fiduciary duties to shareholders and failed to act in good faith, wiping out more than $1 billion in value by the time of MF Global's Oct. 31, 2011, bankruptcy.

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Eastman Kodak Co. said that it has reached a settlement with Kyocera Corp. in the companies' ongoing patent dispute, Dow Jones Daily Bankruptcy Review reported today. In a court filing yesterday, Kodak said that Kyocera will drop its $80 million claim against Kodak, which will receive a payment from Kyocera for about $5 million. The two sides will drop pending patent litigation against one another, and they have agreed not to pursue any further patent fights against the other until at least three years after Kodak has exited chapter 11.

One of Residential Capital LLC's largest unsecured creditors is seeking court approval to sue the mortgage firm's parent, Ally Financial Inc., increasing pressure on the government-owned auto lender to pay more money, Dow Jones Newswires reported yesterday. Wilmington Trust, a trustee for $1 billion of ResCap senior unsecured bonds, renewed arguments on Friday that Ally stripped ResCap of valuable assets prior to the mortgage subsidiary's chapter 11 filing last May, assets that Wilmington says are worth billions of dollars. A key transaction at issue is the transfer of ResCap's ownership stake in Ally Bank, the depository subsidiary of Ally Financial that Wilmington and other creditors claim was ResCap's most valuable asset. Ally completed that transaction in 2009, a move Wilmington says exacerbated ResCap's financial problems as it faced rising litigation over soured residential mortgage-backed securities.

Peabody Energy Corp. is seeking dismissal of a Patriot Coal Corp. lawsuit over obligations to retirees, saying the case is not "ripe" because it depends on the outcome of Patriot's negotiations with its union, Bloomberg News reported yesterday. Patriot's lawsuit, filed in bankruptcy court in March, should not go forward, Peabody said in court papers filed April 12. Peabody also said that Patriot should not blame its financial problems on the 2007 spinoff that split the St. Louis-based companies. The issues raised by Patriot "do not present an 'actual controversy' between the parties that is ripe for judicial resolution," lawyers for Peabody wrote. A hearing on Peabody's request is set for April 29.

A plan to repay victims of the $1.2 billion Ponzi scheme run by disbarred Florida attorney Scott Rothstein is on hold after a judge rejected disclosure materials explaining the proposal, Bloomberg News reported on Friday. Bankruptcy Judge Raymond B. Ray, who is overseeing the liquidation of Rothstein’s law firm, on Friday ordered a hearing on a motion to end the chapter 11 case and appoint a new trustee under chapter 7. Several groups of investors oppose the plan by current trustee Herbert Stettin, which included a settlement with Toronto-Dominion Bank. The plan would bar investors from suing TD Bank and halt pending state-court lawsuits against the bank.

The bankruptcy estate of the pharmacy linked to a deadly U.S. meningitis outbreak plans to battle nearly 30 states to preserve its right to redeem several million dollars worth of insurance policies for creditors, Reuters reported on Friday. The insurance policies are key assets in New England Compounding Center's (NECC) bankruptcy estate. Paul Moore, the trustee for NECC's bankruptcy estate, requested court approval to hire Collora LLP, a Boston law firm known for its high-profile defense work, according to documents filed on Friday. Collora would battle pharmacy board regulators from at least 28 states and contend with an ongoing, previously disclosed investigation by the U.S. Justice Department, according to the trustee. Creditors in the bankruptcy include the victims of the outbreak, court records show. Their claims, however, are much larger than NECC's assets, which have been listed at between $1 million and $10 million.

Residential Capital LLC's creditors want the right to sue ResCap parent Ally Financial Inc. over dealings between the entities before and since ResCap's bankruptcy filing, which, if successful, could put government-controlled Ally on the hook for all $20 billion to $25 billion in ResCap's liabilities, Dow Jones Daily Bankruptcy Review reported today. In a court filing on Thursday, ResCap's unsecured creditors' committee said that its investigation into the relationship between the two companies "paints a stark picture" of Ally's "domination, control, and abuse" of ResCap. A hearing on whether the creditors can sue over the matter is set for April 30.

The Department of Justice said that the U.S. and New York State have entered into a $5.5 million settlement with the former General Motors Corp., now referred to as Old GM, for environmental liabilities at a site contaminated with hazardous substances in New York, Dow Jones Newswires reported yesterday. The agreement with the trust responsible for winding up the affairs of chapter 11 debtor Motors Liquidation Company concerns environmental liabilities for damages to natural resources at the Onondaga Lake Superfund site in Onondaga County, N.Y. The agreement is the 13th and final agreement in a series of settlements resolving the environmental obligations and liabilities of Old GM, according to the statement. Those settlements have collectively resulted in recoveries or allowed claim amounts totaling about $904.5 million.

The state of Michigan has backed off its bid to block the post-bankruptcy remnants of battery maker A123 Systems Inc. from preserving and selling millions of dollars in tax-credits, Dow Jones Daily Bankruptcy Review reported today. Michigan, which had protested the former A123's plan to keep nearly $125 million in tax credits and, possibly, sell them to a third party, withdrew its objection on Wednesday.

Grant Thornton LLP won the dismissal of a lawsuit that accused the firm of accounting malpractice that helped contribute to the 2003 collapse of Italian dairy company Parmalat SpA, Reuters reported yesterday. U.S. District Judge John Darrah adopted the 2009 findings of a Manhattan federal judge in ruling against Parmalat and Enrico Bondi, its foreign representative and former chief executive. The Manhattan judge, Lewis Kaplan, agreed with Grant Thornton and two affiliates that Parmalat was not excused from a legal doctrine, known as "in pari delicto," that prevents a company from recovering for its own fraud. Judge Darrah recently took over the case, and in an April 9 decision rejected Bondi's effort to move it to Cook County Circuit Court, an Illinois state court.