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Bankruptcy Judge Martin Glenn said yesterday that he could issue his decision either approving or rejecting a proposed settlement between former Dewey & LeBoeuf partners and the defunct firm's estate as early as Tuesday, the American Law Daily reported today. Judge Glenn said in a hearing yesterday that he hopes to rule by Tuesday or Wednesday on the partner contribution plan, under which roughly 450 former firm partners have agreed to repay the estate a total of $71.5 million in exchange for waivers from Dewey-related liability. The settlement sum—cobbled together from individual payments ranging from $5,000 to $3.37 million—represents income the participating partners received from Dewey in 2011 and 2012, as well as tax advances and unpaid capital contributions.

U.S. District Judge Paul Gardephe ruled that the U.S. government's role in the collapse of Lehman Brothers Holdings Inc. will be allowed as evidence in the Oct. 9 trial over allegations that Reserve Primary Fund misled investors in 2008, Bloomberg News reported yesterday. The company will be permitted to present evidence that its confidence in Lehman's finances were based in part on the U.S. Securities Exchange Commission’s oversight of the investment bank under a voluntary regulatory program, according to Judge Gardephe's decision. A trial is scheduled to begin Oct. 9 in the SEC’s case alleging that the company misled investors about the safety of the fund after it suffered losses in Lehman investments. The fund, which held $785 million in debt issued by Lehman, became the first money fund in 14 years to expose investors to losses when Lehman filed for bankruptcy protection in September 2008.

Ally Financial Inc. is worried that the proposed sale of Residential Capital LLC's mortgage-servicing platform might hamstring ResCap's promise to abide by the terms of a landmark national mortgage settlement, Dow Jones Daily Bankruptcy Review reported today. Ally, ResCap's government-controlled parent, on Friday expressed concerns about whether Nationstar Mortgage LLC would fulfill ResCap's obligations under the settlement if it wins a coming auction for the bankrupt company's mortgage-servicing portfolio. Nationstar, a subsidiary of Fortress Investment Group, has been named the lead bidder in that contest, with a $2.5 billion bid. According to Ally, the tentative sale deal with Nationstar does not spell out that the prospective purchaser will "honor and perform all of the debtors' obligations" under a settlement the nation's largest mortgage lenders struck with the Department of Justice and scores of state attorneys general over alleged violations in mortgage origination and foreclosure practices. Ally said that it will not back the transaction unless ResCap's settlement responsibilities are preserved.

A long-running legal fight involving allegations that Wichita, Kan.-based Hawker Beechcraft made false statements and misrepresentations in the sale of military aircraft to the United States is now dogging the company’s bankruptcy proceedings, the Associated Press reported yesterday. Former employees of a subcontractor of Hawker Beechcraft sued the company more than five years ago under the False Claims Act, which allows citizens to bring claims on behalf of the government. The complex case has yet to be resolved. When Hawker Beechcraft filed for bankruptcy protection in May, those court proceedings were halted. But plaintiffs Donald Minge and David Kiehl last week asked the bankruptcy court to find that their claims are not dischargeable in bankruptcy. They argued that because they are prosecuting the false actions claim on behalf of the government, the debt is owed to “a domestic governmental unit.” They are also seeking costs and attorney fees.

Creditors of bankrupt Residential Capital LLC asked a judge to let them probe, and possibly sue, bondholder trustees Wells Fargo & Co. and U.S. Bank NA, a move the creditors say could net "hundreds of millions" of dollars, Bloomberg News reported yesterday. When the mortgage company filed bankruptcy in May, it boosted the declared amount of collateral backing bondholder claims by $1.1 billion, to assets worth about $2.4 billion, the unsecured creditors' committee said yesterday in court papers. ResCap, as the company is known, thus waived its right to challenge the bondholders' claims to the collateral, creditors said.

Creditors owed $1.5 million have filed an involuntary chapter 7 petition against Absolute Fund LP, which in May was accused by regulators of running an $11 million Ponzi scheme, Dow Jones DBR Small Cap reported today. Three creditors---North East Capital Fund, OM Global Investment and Alpha Global Advisors---claiming to be owed a total of $1.5 million filed the petition to force the fund into a chapter 7 liquidation on Friday.

A U.S. House panel on Friday looked into whether the Federal Communications Commission followed its own rules when it gave Phil Falcone 's LightSquared approval for a wireless network in early 2011, a decision that has since been put on hold over global-positioning systems concerns, Dow Jones Daily Bankruptcy Review reported yesterday. At a key moment for LightSquared, which has been in bankruptcy since May, the House Subcommittee on Oversight and Investigations questioned an FCC bureau chief about whether the commission "rushed through" a process that led to an initial approval for LightSquared to use wireless spectrum. That decision is now in limbo because of concerns over whether the network interferes with global positioning systems.

The wind-down team of defunct law firm Dewey & LeBoeuf revealed the identities of partners participating in a proposed $71.5 million settlement on Thursday, and disclosed how much money each partner had agreed to pay, Reuters reported on Friday. The settlement, if approved, would be the first major recovery for creditors who claim they are owned more than $500 million. Partners are agreeing to contribute back compensation -- between $5,000 and $3.5 million each -- in exchange for being released from potential clawback claims. The amounts contributed are pegged to the partners' compensation at the firm.

The team of former Dewey bankruptcy lawyers who represented the Los Angeles Dodgers in the team's $2 billion sale appear to be using the sale as leverage in a potential settlement with the firm’s estate, which has asked them to help collect fees from the case, the Wall Street Journal reported today. According to a stipulation filed late last week in federal court, the four ex-partners–Bruce Bennett, Sidney P. Levinson, James O. Johnston and Joshua M. Mester–are pursuing damage claims for “fraud, misrepresentation, breach of fiduciary duty and other claims” against Dewey & LeBoeuf, members of the firm’s executive committee and “certain other persons.” All four had special pay deals with the firm that, according to the filing, date back to 2011.

About 60 former Howrey attorneys have joined forces to protect themselves from potential lawsuits to recover the compensation they received before the law firm’s demise and subsequent bankruptcy filing last year, the Wall Street Journal reported today. The attorneys, who once populated Howrey’s intellectual property, litigation and other practices and now work at such firms as Cooley and Greenberg Traurig, have hired the San Francisco law firm of Dumas & Clark to represent them in "protecting and advancing certain common interests and issues in lawsuits, claims, and proceedings that are or may potentially be alleged or asserted by or against members of the group," according to a bankruptcy court filing on Friday. The trustee running Howrey’s liquidation, Allan Diamond, has said that he may sue Howrey’s former partners to recover compensation paid out of the law firm’s alleged profits.