The U.S. Commodity Futures Trading Commission yesterday won court approval to intervene in a $205 million dispute between oil major ConocoPhillips and the bankruptcy trustee for MF Global Inc., Reuters reported. At issue is the treatment of letters of credit that the oil company -- a longstanding MF Global customer -- had lodged with the now bankrupt brokerage to back its energy trades. The CFTC told a federal court in a filing last week that it should be allowed to intervene because of the public policy interest in "the correct interpretation" of law and rules governing the futures industry. The regulator, which favors the trustee's interpretation of the letters of credit issue, will be able to present its views in court and try to influence a decision that could cost Conoco tens of millions of dollars should it go against the company.
Ocwen Financial Corp. and Walter Investment Management Corp. have teamed up to top Nationstar Mortgage Holdings Inc's starting bid for Residential Capital LLC's mortgage business, ensuring a bankruptcy auction goes ahead next week, Reuters reported on Friday. The consortium offered to buy the mortgage business for $40 million more than Nationstar's $2.45 billion opening bid, though Nationstar was expected to make an updated bid. Several other potential buyers that had shown interest in the business, including private equity firm Blackstone Group and technology company IBM Corp, were not expected to submit offers, potentially leaving Nationstar and the Ocwen-Walter group as the main contenders.
ABI's Commission to Study the Reform of Chapter 11, whose 22 members constitute a venerable bankruptcy industry Hall of Fame, held a hearing yesterday to gather feedback on what is right and wrong with the statutory scheme that has governed chapter 11 bankruptcy since 1978, Reuters reported. The commission's charge includes "literally considering starting from scratch and re-inventing the statute," said Robert Keach, attorney and commission co-chairman. The commission plans to eventually submit a report to Congress, targeted for April, 2014, that could serve as "part blueprint, part outline" for new legislation, Keach said. The commission will study 13 areas of bankruptcy law, including labor & benefits issues, financing rules and government supervision. It is collecting feedback from several groups through a series of hearings, with upcoming dates at the National Conference of Bankruptcy Judges in San Diego on Oct. 26, and a convention of trade group the Turnaround Management Association in Boston on Nov. 3. Read more: http://www.reuters.com/article/2012/10/18/bankruptcy-reform-idUSL1E8LHP…
To obtain the prepared witness testimony from yesterday's hearing, view background information on the Commission members or to see upcoming dates of activity, please click here: http://commission.abi.org/
Pennsylvania's troubled West Penn Allegheny Health System on Tuesday accused insurer Highmark Inc. of breaching a $475 million merger agreement, saying that Highmark tried to force it into bankruptcy to lower debt as a condition of the planned affiliation, Reuters reported yesterday. The countersuit is a rebuttal to an Oct. 1 lawsuit that Highmark filed in the Pennsylvania Court of Common Pleas. Highmark is seeking to block West Penn from talking to other potential investors and claims that West Penn violated their contract by pulling out of the deal.
Dewey & LeBoeuf's former New York landlord has some potentially chilling news for the bankrupt firm's former partners: They may be personally liable for $45 million related to the lease on the firm's midtown Manhattan headquarters—and liability waivers included as a part of a recently approved $71.5 million settlement deal with Dewey's estate will not protect them, American Law Daily reported today. The lease in question dates to 1989, a period during which major law firms were structured as general partnerships, meaning anyone hoping to become an owner of the operation would have to agree to back the firm's debts in exchange for the opportunity to share in the profits. That was the case for Dewey, Ballantine, Bushby, Palmer & Wood—which later shortened its name to Dewey Ballantine and became Dewey & LeBoeuf through its 2007 merger with LeBoeuf, Lamb, Greene & MacRae—when it entered into a 20-year lease with Tishman Speyer Trammell Crow, the then-owner of 1301 Avenue of the Americas. Read more: http://www.americanlawyer.com/PubArticleALD.jsp?id=1202575180410&slretu…
To learn about unfinished business litigation and other issues surrounding the dissolution of a financially distressed law firm, listen to the latest ABI podcast: http://news.abi.org/podcasts
The court-ordered mediation between the Archdiocese of Milwaukee and victims of sexual abuse has failed, sending the parties back to bankruptcy court to resume legal negotiations, the Milwaukee Journal Sentinel reported today. The church and victims — at 575 members, they represent the largest class of creditors in the bankruptcy — have been in court-ordered mediation since July 20. Victims attorney Jeffrey Anderson confirmed Monday that the mediation had failed but declined to elaborate on the sticking points, citing the confidentiality of the proceedings. The archdiocese filed for chapter 11 bankruptcy protection in January 2011, saying that it was the only way to equitably compensate victims and still continue the church’s ministry. Bankruptcy Judge Susan V. Kelley ordered both sides into mediation in July.
The fight to bring four marquee U.S. hotels out of bankruptcy is turning increasingly nasty, with a hedge fund accusing the company that oversees their mortgage debt of "bullying" management into accepting a $1.5 billion offer from Singapore's sovereign wealth fund, Dow Jones DBR Small Cap reported yesterday. Five Mile Capital, a hedge fund that owns a junior portion of the resort's debt, claims in court papers that Midland Loan Services, the so-called special servicer of the resorts' commercial mortgages, colluded with KSL Capital Partners and GIC RE, the real estate arm of Singapore's sovereign wealth fund, to force the resorts' management into accepting the stalking-horse bid. Midland, the special servicer for mortgage lenders owed $1 billion, blasted what it called the hedge fund's "incendiary" charges.
Lehman Brothers Holdings Inc., which planned a second payment to creditors of $10.2 billion on Oct. 1, said that its largest claim on an affiliate is $15.2 billion owed by its defunct brokerage, Bloomberg News reported yesterday. Lehman had cash of $8.3 billion as of June 30, plus restricted cash of $13.6 billion, including money set aside for disputed claims and debts, the company said yesterday in a regulatory filing. It was owed $45.2 billion by affiliates, including the $15.2 billion claimed from the Lehman Brothers Inc. brokerage and $14.3 billion owed by a Swiss affiliate, Lehman Brothers Finance. The final amounts of both claims are being negotiated.
The owner of a land parcel where Tri-Valley Corp. drills for oil filed a lawsuit against the oil-and gas-exploration company, asking the court to terminate the lease agreement because of Tri-Valley's alleged violations, Dow Jones DBR Small Cap reported today. The lawsuit, filed as part of Tri-Valley's chapter 11 case, comes ahead of an auction for Tri-Valley's assets, scheduled for Wednesday.
Giving a group of retired Dewey & LeBoeuf partners an official role in the defunct firm's chapter 11 bankruptcy was a "misstep" that needs to be corrected, according to attorneys representing the Dewey estate, the American Law Daily reported on Friday. In a court filing made last Wednesday, lead Dewey bankruptcy lawyer Albert Togut lists five specific reasons why the four-member official committee of former partners appointed by the U.S. trustee's office in late May should be disbanded. Togut says the group's interests can still be represented via an official unsecured creditors committee working on behalf of all such creditors in the bankruptcy, as well as by a 50-member ad hoc group of retirees from legacy firm LeBoeuf, Lamb, Greene & MacRae that formed to protect benefits owed under a pension plan tied to that firm. Both the official former partner committee and the ad hoc group opposed the recently approved $71.5 million settlement plan with former partners that offered partners the chance to give back a percentage of money they earned from Dewey in 2011 and 2012 in exchange for a waiver of Dewey-related liability. The two groups have argued that the plan was created to favor recently departed partners and that retirees have been strong-armed into participating in it though they receive little for doing so. http://www.americanlawyer.com/PubArticleALD.jsp?id=1202574646316
A settlement to pay off some of the debt of failed law firm Dewey & LeBoeuf LLP gave hundreds of former partners an escape hatch from ugly litigation, according to a Wall Street Journal analysis today. Most law-firm bankruptcies devolve into "the law of the jungle," with lawsuits flying in all directions, said Peter Gilhuly, a bankruptcy partner with Latham & Watkins LLP who has represented insolvent firms. Law firms have few assets to liquidate aside from uncollected client bills, so the main source of recovery for creditors often is the partners themselves. As trustees and creditors try to "claw back" money from partners, the process can grind on for years. But Dewey's bankruptcy team pushed hard for a deal early on to avoid the expense and vitriol that has marked other law-firm failures. Lawyers who signed up for Dewey's so-called partner-contribution plan, gave back a portion of their 2011 and 2012 compensation in exchange for release from future lawsuits. A federal bankruptcy judge last Tuesday approved the settlement in record time, less than five months after the firm sought chapter 11 protection on May 28. (Subscription required.) http://online.wsj.com/article/SB100008723963904436242045780566641578407…
