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Online music storage firm MP3tunes Inc. filed for chapter 11 protection following its prolonged run-in with music publishing giant EMI Group over copyright issues, Reuters reported today. EMI's lawsuit against MP3tunes and its chief executive, Michael Robertson, is part of the music industry's efforts to stop websites from letting people download and share music online without paying for it. Fourteen other record companies and music publishers were also part of the copyright case that was filed in 2007. However, last year, a federal judge said that MP3tunes and Robertson did not violate the federal Digital Millennium Copyright Act (DMCA) in permitting downloads, except as to songs specifically identified as having been pirated. The judge said that it was users rather than MP3tunes that were responsible for any infringements. However, the court did find the defendants liable for "contributory" copyright infringement for songs where notices of alleged infringement were provided.

When the next crisis brings a major financial firm to its knees, U.S. regulators will seize the parent company but allow its units around the globe to keep operating while the mess is cleaned up, according to a plan to be announced today from the Federal Deposit Insurance Corp., the Wall Street Journal reported. The equity stakeholders of the large bank or other financial firm will be wiped out, and bondholders will face losses as their holdings are swapped for equity in a new entity, as a part of the FDIC's plan. If several federal agencies and the Treasury Department agree to seize a firm, the FDIC will unwind the parent bank holding company of the faltering firm, placing it in receivership and revoking its charter. The firm's subsidiaries around the world would continue to operate, supported with liquidity the FDIC-held parent company can borrow from the government under the Dodd-Frank financial overhaul. Next, the FDIC would transfer most of the firm's assets and some of its liabilities into what's known as a "bridge company," according to FDIC officials. There, regulators would oversee a debt-for-equity swap akin to what occurs under a chapter 11 restructuring: Equity holders would be wiped out, but creditors would get equity in exchange for the claims they held. The company eventually would emerge from the process as a new, recapitalized private entity.

Bankruptcy Judge Mary Walrath said that LSP Energy can keep control over its chapter 11 case through Sept. 7 while it continues to look for a buyer for its Mississippi power plant, Dow Jones DBR Small Cap reported today. Judge Walrath on Monday signed off on the extension, which extends the company's deadline to file a creditor-payment plan without the threat of rival plans from creditors.

Hostess Brands Inc., the maker of Twinkies and Wonder Bread, has been given approval by a bankruptcy judge to reject certain union contracts and modify some retiree benefits, Reuters reported yesterday. Hostess can now reject some agreements with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, as the company tries to cut crippling legacy costs associated with its pension plans and massive debt levels. However, contracts that had expired before the start of the hearing, under which the union is still operating, cannot be modified or rejected by the company, Judge Robert Drain said in court documents published on Friday.

Mark your calendars for May 23 from 2-3:30 p.m. ET for the ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar. A panel of experts will be discussing recent developments in several large complex bankruptcy cases, including Hostess, Kodak, Nortel and American Airlines. For more information and to register, please click here: http://www.abiworld.org/laborweb/index.htm.

U.S. District Judge Lewis Kaplan has refused for now to allow insurers for former officers and directors of Lehman Brothers Holdings Inc. to pay $90 million to settle a fraud lawsuit brought by investors, Reuters reported on Friday. Judge Kaplan on Thursday directed five former officers of the investment bank, including Chief Executive Richard Fuld, to file financial paperwork by May 10 to help him decide whether the settlement is fair. Judge Kaplan will review not only whether their combined liquid net worth is less than $100 million, as a mediator had found, but also whether they have other assets that could be tapped to help former Lehman investors recoup their losses on tens of billions of dollars of securities.