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Residential Capital LLC’s disclosure statement for its reorganization was opposed by the U.S. Trustee, Bloomberg News reported yesterday. The U.S. Trustee said in a court filing yesterday that the statement doesn’t adequately describe the plan. Also, provisions of the plan contained in the disclosure statement include impermissible payments for the reimbursement of legal expenses of certain creditors, the trustee said. Unless the provisions at issue are removed, the plan “is not confirmable and neither the plan nor the disclosure statement may be approved,” the filing said. Last month, the bankrupt mortgage company filed a reorganization plan estimating unsecured creditors will recover about 36 percent of what they are owed, while debts backed by collateral will be paid in full.

Embattled bank-holding company Capitol Bancorp Ltd. won court approval to sell its controlling stake in an Ohio community bank to Amalgamated Bank of Chicago, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Marci B. McIvor on Wednesday signed off on the sale of Capitol’s 51 percent stake in Bank of Maumee, a small northwest Ohio savings bank, to Amalgamated. The purchase price wasn't disclosed.

Montreal, Maine and Atlantic Railway, the Maine-based railroad whose oil train caused a fire and explosion that claimed 47 lives in a small town in Quebec, has filed for chapter 11 protection, the Associated Press reported yesterday. Company Chairman Ed Burkhardt said previously that a bankruptcy filing was likely due to service disruptions because its rail line remains closed in Lac-Megantic, Quebec. The company also faces lawsuits and enormous cleanup costs following the July 6 derailment and disaster in Lac-Megantic. The train with 72 tankers full of crude oil was unattended when it began rolling, eventually tearing into the town. Burkhardt blamed the train's operator for failing to set enough hand brakes.

The pilots of AMR Corp.'s American Eagle unit say they want more information about what their fate will be when AMR's merger with US Airways Group Inc. is finalized, Dow Jones Daily Bankruptcy Review reported today. Lawyers for the Air Line Pilots Association union said in a court filing on Tuesday that while it doesn't object to the historic merger, it wants the American Airlines parent to explain what it plans to do with the American Eagle arm.

Eastman Kodak Co.'s second-quarter loss narrowed as gross margins improved and as an income tax provision helped bottom-line results, the Wall Street Journal reported today. The Rochester, N.Y.-based company, which filed for Chapter 11 in January 2012, shed employees and its unprofitable businesses during the bankruptcy process and is poised to leave chapter 11 as a leaner company focused on commercial imaging, including digital printing and motion-picture film. For the latest period, Kodak reported a loss of $274 million compared with a year-earlier loss of $299 million, or $1.10 a share. The loss from continuing operations narrowed to $208 million from $297 million a year earlier. The latest period includes $101 million in restructuring costs and a $51 million provision for income taxes.

Bankruptcy Judge Christopher Sontchi yesterday granted Orchard Supply Hardware Corp. permission to pay up to $3.1 million in bonuses to its top executives, Dow Jones Daily Bankruptcy Review reported today. Judge Sontchi said that he would sign off on the bonuses, which are tied to the successful sale of the company’s business, after a U.S. Trustee grilled Orchard’s advisers on whether the payments complied with bankruptcy laws.

The corporate parent of Fort Worth, Texas-based Hawk Electronics says that it will declare bankruptcy this week and liquidate after defaulting on a loan to its major creditor, which then blocked access to nearly $800,000 in its bank accounts on July 30, the Fort Worth Star-Telegram reported today. Customers are being told that there will be no interruption of service as Hawk, a unit of Teletouch Corp., transfers the account to its master network provider AT&T. Although Teletouch said in a July 30 federal securities filing that would file for chapter 11 reorganization in Delaware this week as it phases out its ongoing business. The company could then file a liquidation plan with the bankruptcy court or convert the bankruptcy to chapter 7 liquidation. The company said it had been trying to negotiate a deal with its New York lender, DCP, so it could meet its short-term obligations. It disclosed in February that DCP had extended a $6 million line of credit. The Fort Worth communications wholesaler-retailer disclosed last month that it had defaulted.

Phil Falcone’s hedge fund sued satellite TV mogul Charlie Ergen and his Dish Network Corp. for $4 billion yesterday for an alleged loan-trading scheme aimed at stripping Falcone of his control over LightSquared Inc., a bankrupt wireless communications business, Reuters reported yesterday. Billionaire Ergen has turned his focus to LightSquared after bowing out of a takeover fight for another wireless company, Sprint Corp., which agreed to a deal with Japan’s SoftBank Corp. Ergen increased his bid for LightSquared to $2.2 billion last month. LightSquared is a provider of satellite-based mobile voice and data services to hundreds of thousands of devices used in the public safety, security and asset-tracking sectors. It is building a 4G LTE broadband mobile network that it says will serve 260 million people. The lawsuit by Falcone’s Harbinger Capital Partners alleges that Ergen and his affiliates engaged in a complex fraudulent scheme to become LightSquared’s biggest lender. Harbinger alleges Ergen is trying to use that position to strip Falcone of the company.

Former FBI Director Louis J. Freeh wants a $1 million fee for leading the bankruptcy wind-down of MF Global Holdings Ltd., the failed commodities firm led by former New Jersey Gov. Jon Corzine, Dow Jones Newswires reported yesterday. In a court filing on Monday, lawyers for Freeh said that he brought “instant credibility” when he was assigned to serve as the firm’s chapter 11 trustee in November 2011 shortly after the firm collapsed under the weight of Corzine’s large bets on European debt. They asked for the $1 million in addition to more than $10 million billed by Freeh and his legal team from Pepper Hamilton LLP for their hourly work on the case. Freeh’s hourly rate is $900.

The owner of struggling Trinity Coal Corp. has put up $15 million to stop the bankruptcy auction process for the company’s Appalachian coal mining operations — a halt that buys Trinity Coal executives time to negotiate a bankruptcy exit plan with its lenders, Dow Jones Newswires reported yesterday. Trinity Coal’s owner, India-based steel and energy conglomerate Essar Global Ltd., agreed to spend $15 million to keep the company operating and push back a series of auction deadlines required by Trinity Coal's lenders, according to court papers. The deal pushes back Trinity Coal's bankruptcy loan-repayment deadline to Nov. 8.