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The top three former executives at Dewey & LeBoeuf LLP, the defunct law firm, filed objections to aspects of the proposed settlements with about 400 partners designed to bring in $71 million, Bloomberg News reported today. Steven Davis, the former chairman; Stephen DiCarmine, the former executive director, and Joel Sanders, the ex-chief financial officer, said last week that it is improper that releases under the settlements end up making them solely liable for the firm's failure. The law does not permit the settlements to eliminate their rights to have liability for only their "proportionate share" of damages, the three former executives said in a court filing. They also object to making secret the identities of the settling partners, saying that they need to know who settled in preparing their defenses.
http://www.bloomberg.com/news/print/2012-09-17/former-dewey-leaders-see…

In related news, Citibank N.A. is forcefully denying allegations by a former lawyer with the now-defunct Dewey & LeBoeuf that the bank conspired with leaders of the firm to woo lateral partners with a Ponzi-like scheme aimed at paying off Dewey's debts to the bank through a steady flow of capital contribution payments, the American Law Daily reported on Saturday. In court filing submitted on Wednesday, Citi asserts that partners should have done their own research into the firm's financial condition and that it was not the bank's responsibility to warn them. Citi also lays out why it believes it deserves repayment of a loan it extended to former Dewey partner Steven Otillar, who borrowed $207,000 from the bank in 2011. Citi's filing comes in response to Otillar's allegations that the bank conspired with former Dewey leaders to fraudulently induce partners to join the firm and his claims that Citi should have cautioned him of Dewey's financial troubles when he took out the loan.
http://www.americanlawyer.com/PubArticleALD.jsp?id=1202571459496&slretu…

The U.S. Commodity Futures Trading Commission (CFTC) said that the Peregrine Financial Group Inc. trustee should delay distribution of $123 million to customers of the defunct futures brokerage until after testing customer accounts, Bloomberg News reported yesterday. The tests are essential because Peregrine collapsed amid a fraud and theft of money by its founder, Russell Wasendorf Sr., the CFTC said yesterday in a court filing. The regulator asked the judge not to approve the payout until all the accounts of intended recipients are validated. Peregrine filed for chapter 7 liquidation on July 10, hours after the CFTC sued accusing the firm and Wasendorf of misappropriating more than $200 million in customer funds.

Peregrine Financial Group's bankruptcy trustee plans to return $123 million to former customers of the futures brokerage, the first they would see of their funds since Peregrine's mid-July collapse but far short of a figure that would make them whole, Reuters reported yesterday. About 17,000 futures customers are eligible for the distribution, with customers of U.S. exchanges getting 30 percent of their funds, and traders on non-U.S. exchanges getting 40 percent, according to a court filing on Wednesday. The claims of the broker's other 7,000 customers, who traded currency and metals, "will be addressed separately," the filing said.

Solyndra LLC, the failed solar-panel maker, won preliminary court approval of a $3.5 million settlement with former workers, Bloomberg News reported yesterday. Bankruptcy Judge Mary Walrath granted tentative approval of the settlement and set a hearing for Oct. 17 to consider making the ruling final, according to court documents filed yesterday. Former employees sued Solyndra, which received a $535 million U.S. Energy Department loan guarantee before collapsing, arguing that they did not get adequate notice when the company fired almost its entire workforce last year. The settlement resolves allegations that Solyndra violated the Worker Adjustment and Retraining Notification Act, which requires 60 days’ notice of firings, and sets up a $3.5 million fund that will be distributed to the workers two weeks after the accord takes effect.

Bankruptcy Judge Martin Glenn said yesterday that he was prepared to allow the trustee unwinding MF Global's broker-dealer to join forces with some of the company's former customers who have sued ex-Chief Executive Jon Corzine and other insiders, Reuters reported yesterday. Judge Glenn said that he will make his decision official when the trustee, James Giddens, files court papers outlining the details of the cooperative effort. The filing will reflect language changes requested by Judge Glenn, particularly over concerns about how proceeds of the class actions would be allocated among MF creditors. Judge Glenn ordered the plan's language updated to address objections by the defendants in the class actions, and by Louis Freeh, the trustee liquidating MF Global's parent entity.

Ira Bodenstein, the bankruptcy trustee for Peregrine Financial Group, may use lawsuits to try to recover funds missing from customer accounts at the collapsed brokerage, Reuters reported yesterday. "The trustee believes that there are significant causes of action that have to be investigated and may have to be pursued," Bodenstein said in a court filing yesterday. Nearly two months have passed since Peregrine Financial's CEO Russell Wasendorf Sr. was found incoherent in his car with a hose hooked up his exhaust pipe and a note detailing years of bilking clients out of more than $100 million. The firm filed for Chapter 7 bankruptcy on July 10, but so far, none of the firm's 24,000 customers have had any of their money returned as part of the liquidation process.

New York Attorney General Eric Schneiderman accused the Bernard Madoff brokerage trustee of trying to intimidate the state's top law enforcers in a bid to overturn a $410 million settlement with a former Ponzi- scheme investor, Bloomberg News reported yesterday. Schneiderman on Aug. 31 asked a district judge to take over the case so he could complete the settlement of a state lawsuit against J. Ezra Merkin, who allegedly diverted customer funds to Madoff. Trustee Irving Picard has asked a bankruptcy judge to block the deal, saying that it obstructs his own efforts to collect $500 million from Merkin and his funds for a different group of Madoff investors.

U.S. Trustee Roberta DeAngelis joined criticisms of Solyndra LLC's plan to repay its debts, saying that the bankrupt solar panel maker should disclose whether it is favoring venture capital investors over creditors, Reuters reported yesterday. DeAngelis said in a court filing that Solyndra should provide more information about the repayment plan, which preserves potential tax benefits for the two investment funds that are sponsoring the bankruptcy plan. Earlier this week, the Department of Energy and the Internal Revenue Service also demanded more details about the tax benefits. The two agencies said in a court filing that the Madrone Partners and Argonaut Ventures funds stood to gain more than $500 million in future tax breaks from the Solyndra bankruptcy.

The trustee tracking down funds to pay creditors of Ponzi-scheme orchestrator Tom Petters won a key ruling in bankruptcy court, the Wall Street Journal reported today. Trustee Douglas Kelley, who is overseeing the bankruptcy liquidation of Petters’s former business empire, on Tuesday won a $200,000 judgment against Luxembourg soccer club CS Fola Esch, court papers show. The soccer club received $200,000 from Petters in July 2008, just months before Petters was arrested and his companies taken away from him and placed into bankruptcy protection. Petters is now serving a 50-year prison sentence for his 2009 conviction on multiple fraud and other charges, which he unsuccessfully asked the Supreme Court to review.

Louis Freeh, the trustee for bankrupt securities firm MF Global Holdings Ltd., called for settlement talks with other bankruptcy administrators in the U.S. and U.K. amid a clash over how to recover money for the company's customers and creditors, the Wall Street Journal reported today. The proposal was made by Freeh in a court filing yesterday that also outlined his opposition to a plan by a separate trustee, James Giddens, to join several plaintiff lawsuits against former MF Global officials. The move by Freeh comes one month after he submitted congressional testimony projecting that the various estates had enough money to pay back customers.