The trustee winding down Lehman Brothers' broker-dealer business is facing opposition from Barclays PLC to his plan to allocate more than $15 billion to the unit's customers, Dow Jones Daily Bankruptcy Review reported today. Lehman trustee James Giddens and Barclays have been fighting over more than $5 billion in assets for years. Barclays says that it acquired the assets when it bought Lehman's broker-dealer unit in September 2008.
A payment dispute between actor Kevin Costner and the distributor of his film "Robin Hood: Prince of Thieves" has spilled into bankruptcy court, the Wall Street Journal's Bankruptcy Beat blog reported yesterday. A lawsuit filed on March 29 claims that Costner's quest for a share of the revenue generated by the foreign distribution of the 1991 film threatens the distributor’s ongoing restructuring. As a result, the suit aims to block Costner from pursuing the compensation until the distributor, Inverness Distribution Ltd., completes its restructuring.
Patriot Coal Corp. and its creditors' committee want to investigate Peabody Energy Corp.'s 2007 spinoff of the coal producer, saying that the transaction rid Peabody of $600 million in health-care and environmental liabilities, Bloomberg News reported yesterday. Patriot filed for bankruptcy in July, seeking to reorganize and shed some of the $1.6 billion it estimates is owed for lifetime health care for 8,100 retirees. Patriot has already sued to force its former parent to continue paying for the health-care costs of certain retirees whom Peabody employed before the spinoff. The proposed probe would allow Patriot to subpoena documents related to the spinoff, including those that Peabody has refused to share with the company and Patriot’s union, according to court papers. Patriot said that it is considering whether the 2007 transaction that created it "constituted an actual or constructive fraudulent transfer." Under bankruptcy law, companies can make recoveries for distribution to all creditors if money was found to have been improperly transferred out of the estate before the bankruptcy filing.
Verizon Communications Inc., the second-biggest U.S. telephone company, was sued for $2.85 billion in debt and interest stemming from its relationship with bankrupt directory company Idearc, Bloomberg News reported on Saturday. The suit involves the non-payment of debt evidenced by 8 percent senior notes due 2016 that were issued pursuant to an agreement between Idearc and U.S. Bank N.A. as indenture trustee dated November 2006, according to court filings. The trustee filed the suit in New York State Supreme Court in Manhattan yesterday. Verizon spun off Idearc, its directory business, in 2006. Creditors contend the spinoff, designed to generate $9.5 billion for Verizon, left Idearc with so much debt that it was insolvent and destined to collapse. It filed for bankruptcy 28 months after the spinoff.
Baker Botts won a $5.2 million judgment this week in a years-long battle over fees for representing copper miner Asarco LLC in bankruptcy, Reuters reported yesterday. U.S. District Judge Andrew Hanen affirmed the award on Tuesday. Baker Botts had claimed the fees and expenses to cover the cost of defending an earlier award for $142 million in fees for its work on the Asarco bankruptcy. The case stems from the hostile takeover of Asarco by Grupo Mexico SAB in 1999. Four years after the takeover, Asarco's interest in another mining company, Southern Peru Copper Corp., was transferred to another Grupo Mexico unit. Asarco landed in chapter 11 in 2005 amid a labor strike and more than $1 billion of environmental and asbestos claims. In the bankruptcy, Baker Botts brought a fraudulent transfer claim on behalf of Asarco creditors against Grupo Mexico.
Bank of America Corp. and Societe Generale SA appealed a judge's decision upholding regulatory approval of bond insurer MBIA Inc.'s 2009 restructuring, which they say harmed them as policyholders, Bloomberg News reported today. New York Supreme Court Justice Barbara Kapnick was wrong when she dismissed a lawsuit by the banks seeking to reverse approval by the state’s insurance regulator, they said in court papers filed yesterday. In 2009, New York Insurance Department Superintendent Eric Dinallo approved the split, allowing MBIA to move the company's guarantees on state and municipal bonds out of its MBIA Insurance Corp. unit, which guaranteed some of Wall Street’s most toxic mortgage debt. The banks said during a month of oral arguments last year that the approval was based on inaccurate and incomplete information provided by Armonk, N.Y.-based MBIA.
MF Global Holdings Inc. is facing some last minute opposition to its creditor payback plan, one from an old adversary in the case and another from the federal bankruptcy watchdog, Dow Jones Daily Bankruptcy Review reported today. Sapere Wealth Management LLC, an MF Global creditor that lost in a bid to have its claims treated better in the case, is now fighting the way it's treated under the plan. U.S. Trustee Tracy Hope Davis also says that MF Global's proposal, if confirmed, will too broadly protect certain third parties from being investigated or sued later.
Washington, D.C., law firm Howrey LLP was in a "death spiral" for nearly two years, according to new lawsuits that claim that the firm's partners did not seem to know the depth of its financial problems, the Wall Street Journal reported yesterday. Six lawsuits filed in bankruptcy court this month by the trustee overseeing Howrey's liquidation paint a bleak picture of a firm that was fast to expand but slow to adapt, relying on borrowed money instead of profits to pay its partners. The lawsuits, based partly on the firm's books and records, allege that Howrey's partners were not aware of the true extent of the financial woes until it was too late. Howrey's independent and court-appointed bankruptcy trustee, Allan Diamond, is currently seeking to recover millions of dollars from certain former partners' new firms based on the profits from the work they brought to their new firms.
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Shutterfly Inc., the online photo-sharing service, sued bankrupt Eastman Kodak Co., accusing it of violating a noncompetition agreement included in the sale of its Kodak Gallery business, Bloomberg News reported on Friday. A Kodak service called My Kodak Moments, which allows users to create photo books and order prints from their smartphones, is "explicitly prohibited" under the agreement, Shutterfly said in a complaint filed in bankruptcy court on Friday. Shutterfly, based in Redwood City, Calif., last year agreed to buy Kodak Gallery, another online photo-sharing business, for $23.8 million. Kodak Gallery competed with Shutterfly, and a "significant driver" of the purchase price was the noncompete agreement, Shutterfly said in its court filing.
