%1

BankUnited N.A., a secured creditor in Universal Health Care Group Inc.'s chapter 11 case, is asking the court to throw the case out, saying that if it cannot proceed with a foreclosure sale, the company's value will "vaporize," Dow Jones DBR Small Cap reported today. BankUnited, which is representing secured noteholders owed $36.5 million, says that as a result of Universal's chapter 11 filing, the foreclosure sale was halted, but the state's authority to appoint a receiver who, it says, will liquidate Universal, is not affected.

For more information about health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition.

OceanConnect LLC, a trading firm that accidentally sold millions of dollars worth of fake biofuel credits, has filed for bankruptcy, increasing pressure on environmental regulators to fix the fraud that’s infected that market, the Wall Street Journal reported on Saturday. OceanConnect filed for chapter 7 protection on Friday, facing a handful of lawsuits from top gasoline refiners who have demanded to be reimbursed after purchasing the fake credits through OceanConnect’s brokerage operations. OceanConnect said in court papers that it ended last year with a $1.7 million loss. In its bankruptcy petition, the company said that it still had about $350,000 worth of biofuel credits in hand.

Bahrain-based Arcapita Bank, the first Gulf company to file for bankruptcy in the U.S. under chapter 11, said on Saturday that it had submitted a plan to reorganize the company, Reuters reported yesterday. The investment firm filed for bankruptcy in New York in March and was given court approval in November to take out a $125 million loan to provide funding while it restructured its debts. Arcapita's case is being closely watched in the Gulf, where companies have little recourse to dealing with insolvency in an orderly fashion. However, analysts have said few other bankrupt Gulf companies are likely to follow Arcapita in seeking chapter 11 protection because they would need to prove strong business links to the United States.

The U.S. unit of Nortel Networks Corp., the defunct telecommunications company, asked a judge to schedule a November trial on whether to throw out $2.67 billion in claims filed on behalf of 38,000 U.K. retirees, Bloomberg News reported on Saturday. The request came after a mediator gave up on settlement talks last month, saying that bondholders, retirees and other creditors failed to agree on how to split $9 billion in cash. Nortel Networks Inc. asked the judge overseeing its slice of the multi-country bankruptcy to first decide whether the U.K. retirees have a legitimate claim to the money before deciding how best to divide it. Retiree representatives asked the judge to focus instead on how to split cash among Nortel’s units in the U.S., Europe and Canada.

Hostess Brands Inc. today will seek bankruptcy court approval to put many of its brands on the auction block in coming weeks, including Twinkies and Ho Hos, Dow Jones Newswires reported on Friday. A bankruptcy court is set to consider three auction proposals from the liquidating baker, all of which have stalking-horse bids lined up to lead off the bidding at auctions Hostess wants to hold in March. Private-equity firms Apollo Global Management LLC and Metropoulos & Co. have teamed up to bid $410 million for most of Hostess's cakes business, including the Twinkie, Dolly Madison, Ho Hos and Ding Dongs brands. The bid also covers five bakeries and certain equipment. Hostess wants to pay the private-equity firms a $12.3 million breakup fee if they lose at the March 13 auction. The company is further proposing a March 19 sale hearing for the court to approve the winning bid. Also up for consideration before the court today are separate auction proposals for Hostess's Drake's brand and several bread brands, including Grandma Emilie's and Sweetheart.

After nearly a year under chapter 11 protection, home builder American West Development Inc. won court approval to exit bankruptcy, the Las Vegas Review-Journal reported on Saturday. Bankruptcy Judge Mike Nakagawa on Friday overruled objections to a fund that will cover construction defect claims and approved the company's bankruptcy reorganization plan. As a result of a bargain reached with lenders before the case began on March 1, 2012, American West’s debt, $162 million, will be reduced to $49.6 million, reflecting the shrunken value of the Las Vegas-based home builder. The banks agreed to give up their claim to a $112.4 million shortfall, creating the financial room to repay small creditors without any collateral. In court papers filed last month, American West president Robert Evans estimated they could receive as much as 80 percent of the $2.3 million they are owed.

A proposed liquidation plan for MF Global Holdings Ltd. fails to take into account that its finance unit is being hit twice for the same debt, undercutting what some creditors might recover, JPMorgan Chase & Co said in a court filing, Reuters reported on Friday. Creditors of the finance unit could get up to 47.7 percent of their money if the double liability were voided, according to the filing by JPMorgan, which is an agent and lender under the unit's $1.2 billion liquidity facility. That is more than the maximum 33.6 percent that those creditors would receive under the plan proposed earlier this month by Silver Point Capital, Knighthead Capital and Cyrus Capital Partners in conjunction with trustee Louis Freeh.

A group of retired Dewey & LeBoeuf partners whose objections threatened to drag out or even derail the defunct firm's bankruptcy proceedings have reached a settlement that Dewey lawyers say should clear the way for the speedy approval of a pending chapter 11 plan, Am Law Daily reported today. The settlement, detailed in Thursday court filings, has been offered to 125 retired Dewey partners—most of them tied to legacy firm LeBoeuf, Lamb, Green & MacRae—who are being asked to repay the bankruptcy estate a portion of money they received from the firm in 2011 and 2012, including tax advances, payments from non-qualified retirement plans, and Of counsel and special counsel compensation. The retired partners also agreed to forsake future claims against the Dewey estate; abandon some $80 million in proofs of claim filed in the bankruptcy; assign any claims against former Dewey partners, employees, or firm leaders to the estate; and drop their appeal of a $70 million partner contribution plan signed on to by a majority of the firm's former partners. The settlement requires the approval of Bankruptcy Judge Martin Glenn, who has already approved the partner contribution plan.

The anticipated marriage of American Airlines parent AMR Corp. and US Airways Group Inc. would represent a departure from other airline mergers in recent decades, which had been aimed more at creating a huge route network that leapfrogs the competition, rather than at culling money-losing and overlapping flights, the Wall Street Journal reported today. The prospective deal could restore American, which has suffered billions of dollars of losses in recent years, to its former status as the world's biggest carrier. The new American would have hubs at seven of the nine busiest U.S. airports and boast a strong presence in Europe and Latin America.

Universal Health Care Inc. on Wednesday filed for chapter 11 protection seeking to stay in operation as it tries to sell itself, the Tampa Bay (Fla.) Tribune. In its bankruptcy filing, Universal listed assets of $50 million to $100 million and debts between $10 million and $50 million. Its biggest creditors are HCA, which is owed $6 million, and Colorado IT systems provider TriZetto, which is owed $4 million. Both unsecured claims are listed as disputed.

For more information about health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition.