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Hedge fund manager Phil Falcone's efforts to hold onto a piece of his LightSquared wireless venture took a hit yesterday when a bankruptcy judge denied a request by his Harbinger Capital Partners to wipe out a lender group's $1.7 billion claim against a unit of the company, Reuters reported yesterday. Bankruptcy Judge Shelley Chapman criticized the request as an attempt by Harbinger, which controls LightSquared, "to leapfrog up the capital structure over secured creditors." LightSquared has been in chapter 11 bankruptcy since 2012, when regulators barred it from using its wireless spectrum due to fears of interference with GPS systems. It has proposed a restructuring plan that would transfer control of the company to the lenders. Harbinger, hoping to salvage some equity, submitted a competing plan in August, which would split LightSquared's so-called "Inc" and "LP" units and allow Harbinger to retain a stake in the Inc assets. But Harbinger's plan was contingent on Judge Chapman ruling that the lenders did not have any claim against the “Inc” assets.

A pension fund said yesterday that GT Advanced Technologies Inc. shouldn’t be allowed to destroy papers filed under seal in its bankruptcy because shareholders may need the information in lawsuits, Bloomberg News reported yesterday. A sealed declaration by GT Advanced’s chief operating officer, Daniel Squiller, “details the reasons precipitating and necessitating” the bankruptcy, information litigants in at least nine federal securities lawsuits will need, the City of Pontiac General Employees’ Retirement System said in a filing yesterday in U.S. Bankruptcy Court in New Hampshire. GT Advanced filed for bankruptcy this month without specifying why. The Merrimack, N.H.-based company, which makes synthetic sapphire used to strengthen smartphone screens, later cited a burdensome supply agreement with Apple Inc. but continues to keep many of the details secret. The company has since reached a settlement with Apple that originally called for the destruction of Squiller’s declaration once the bankruptcy court approved the deal. Securities law requires all documents that may be relevant to a case be preserved, the retirement fund said in its filing.

The U.S. and Securities Exchange Commission on Tuesday added more than a dozen relatives of Texas businessmen Sam and Charles Wyly to a long-running securities fraud lawsuit against the brothers to bolster its efforts to collect some $300 million, Reuters reported yesterday. The amended complaint filed in New York federal court included the relatives as "relief defendants," which means they are not accused of wrongdoing but can be subject to civil claims. The filing was expected, as the SEC and the relatives continue to dispute whether hundreds of millions of dollars held in offshore trusts should be subject to collection. U.S. District Judge Shira Scheindlin has said she will order the Wyly brothers' assets frozen at the SEC's request, including money previously transferred from the trusts to various relatives, despite objections from the family members.

A Delaware bankruptcy judge has scheduled a confirmation hearing in the Bondex International bankruptcy settlement agreement, LegalNewsline.com reported yesterday. Bankruptcy Judge Peter J. Walsh filed an Oct. 20 order scheduling a hearing on confirmation of the proposed joint plan and approved related notice procedures for Dec. 10 in the U.S. District Court for the District of Delaware. In his order, Walsh approved the debtors’ disclosure statement, the solicitation and tabulation procedures, the certified plan solicitation directive and the ballots. On July 28, RPM International Inc. announced its agreement with the bankruptcy representatives of current and future claimants in order to resolve Bondex-related asbestos liability. According to the agreement, RPM would pay $797.5 million over four years and resolve all present and future asbestos personal injury claims related to its subsidiary Bondex.

GT Advanced Technology Inc., which struck an agreement with erstwhile partner Apple Inc. last week that allowed it to proceed with its bankruptcy, said that the iPhone maker had threatened to seek damages of more than $1 billion against the company. Former stock market darling GT Advanced, once set to become the main supplier of scratch-resistant sapphire to Apple, surprised markets when it filed for chapter 11 earlier this month. It failed to meet performance targets set out in its supply agreement with Apple, setting the stage for its failure, according to court filings. GT Advanced said in a court filing late on Monday that it needed to settle with the iPhone maker to avert a costly legal battle it might not win. "The alternative to the settlement agreement would be months, if not years, of costly, time-consuming, and distracting litigation with Apple over a wide range of contested issues, the success of which GTAT could not guarantee," the company said in a court filing late on Monday.
http://www.reuters.com/article/2014/10/28/gt-advanced-tech-bankruptcy-a…

In related news, Dow Jones & Co. Inc., publisher of the Wall Street Journal, has asked a court to deny a request by Apple Inc. and GT Advanced Technology Inc. to keep under seal some documents relating to GT Advanced's bankruptcy. Dow Jones, owned by News Corp., said that keeping the documents under seal is an offense to constitutional principles of public access, according to the publisher's court filing yesterday. GT Advanced, which supplied sapphire material to Apple to make smartphone screens, filed for chapter 11 protection earlier this month under mysterious circumstances. GT refused to explain why it had imploded, citing confidentiality clauses in its Apple contracts.
http://www.reuters.com/article/2014/10/29/gt-advanced-tech-bankruptcy-d…

A U.S. judge said yesterday that she would order the assets of Texas entrepreneur Sam Wyly, who once made the Fortune 400 list, temporarily frozen since he filed for bankruptcy, Reuters reported yesterday. During a hearing in Manhattan, U.S. District Judge Shira Scheindlin said that she was "not very happy" about the bankruptcy filing, which came after she ordered him and the estate of his late brother Charles to pay $187.7 million plus interest for engaging in fraud. The judge said she would freeze the assets of Wyly and his brother's estate, as well as funds held in offshore trusts at the center of a lawsuit by the U.S. Securities and Exchange Commission. Judge Scheindlin also said that the freeze, which she still needs to sign, would restrict the Wylys' family members from transferring any assets they received or will receive from the defendants or the trusts.

New court filings show that the Backstreet Boys have settled their claims against their creator, Lou Pearlman, whose bankruptcy filing preceded the onetime music mogul’s arrest on fraud charges, the Wall Street Journal reported today. The pop singers said that Pearlman and his Trans Continental Records owed them roughly $3.5 million. Those claims had been challenged last year by a bankruptcy trustee on the grounds that they lacked the necessary proof to back them up. The fighting continued into this year when a bankruptcy judge ordered lawyers for the band and the trustee to work it out. Under the settlement, the Backstreet Boys will receive $99,000 on account of their claims. They’ll also get to take possession of a variety of recordings of their music as well as a “Star Trek Adventure” VHS tape.

Attorneys have postponed a Delaware bankruptcy court hearing over Donald Trump’s fight to remove his name from a struggling New Jersey casino, the Associated Press reported yesterday. Trump is suing Trump Entertainment Resorts in New Jersey state court, demanding that the Trump name come off the Taj Mahal casino in Atlantic City. The lawsuit claims that the company allowed the Taj and the Trump Plaza, which closed last month, to fall into disrepair, damaging the Trump brand. The lawsuit was automatically put on hold when Trump Entertainment, which is trying to keep the Taj open, sought bankruptcy protection last month. The company is fighting Trump’s request, saying it can’t afford the expense or distraction of the state lawsuit as it tries to save the Taj Mahal. A scheduled Thursday hearing was postponed Wednesday until Nov. 24.

Texas tycoon Sam Wyly, who filed for bankruptcy this week, is trying to exhaust his fortune through exorbitant spending to impede the U.S. Securities and Exchange Commission's collection of a $198.1 million fraud claim against him, the regulator told a U.S. judge yesterday, Reuters reported. During a hearing in Dallas bankruptcy court, a lawyer for the SEC criticized Wyly's proposed budget as "staggering." Items include $32,000 a month for assistants to help him write his books and nearly $7,000 a month to support elderly friends and family members. A lawyer for Wyly, Josiah Daniel, said that the budget "reflects some substantial cuts." But U.S. Bankruptcy Judge Barbara Houser said Wyly should consider whether such expenses are "appropriate" given his bankruptcy filing. Wyly filed for chapter 11 protection on Sunday, saying he cannot afford the SEC's claim as well as a potential tax judgment from the Internal Revenue Service.

The state of Washington's tobacco settlement authority says Lehman Brothers Holdings Inc. owes it nearly $40 million for a terminated swap agreement tied to money Lehman invested for it, Dow Jones Daily Bankruptcy Review reported today. In a court filing on Tuesday, lawyers for the tobacco authority say that Lehman's expert witness's contention that Lehman is actually the one owed money is "absurd." In its own Tuesday court filing, Lehman says that the "forward curve" analysis used by its expert is standard in the industry. But lawyers for the Washington authority, which was created in 2002 to make decisions based on the bonds that are backed by the state's tobacco settlement fund, cite a report from its own expert that says Lehman owes $38.6 million.