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Bankruptcy Judge Martin Glenn yesterday approved a settlement under which many former MF Global customers would get back 93 percent of the value of their accounts, a major step in the wind-down of former New Jersey Governor Jon Corzine's collapsed brokerage, Bloomberg News reported yesterday. The approval comes nearly six weeks after trustees for MF's UK and U.S. broker-dealers, as well as its parent, announced the deal to resolve billions of dollars in intercompany claims. The agreement avoids litigation in the UK that could have dragged out MF Global's liquidation for years. It will allow James Giddens, the trustee for MF's U.S. trader customers, to return another $500 million to $600 million to those customers. That would increase total payouts to about 93 percent of the value of their accounts, from the 80 percent or so most have recovered so far.

Lehman Brothers Holdings Inc., which is still liquidating after exiting court protection last year, paid advisers and managers $153.8 million in December, putting total fees over the $2 billion mark in the more than four years since it filed for bankruptcy, Bloomberg News reported yesterday. December’s outlays included $84 million in incentives for a plan that will pay creditors an average of 18 cents on the dollar, according to yesterday's court filing. Restructuring firm Alvarez & Marsal LLC, which runs the defunct investment bank, has made almost $583 million so far, including incentive payments. Lead bankruptcy law firm Weil, Gotshal & Manges LLP has earned $454 million.

Otelco Inc. plans to seek support for a pre-packaged chapter 11 filing from its senior subordinated notes holders in an effort to reduce its overall debt by roughly $135 million, MarketWatch.com reported today. The wireline telecommunication services provider said that it currently has more than $32 million in cash and sufficient liquidity to consummate the transaction. Otelco ended the third quarter with total liabilities of roughly $330.1 million. The company said that its senior lenders have agreed to amend and extend the company's current senior financing through April 2016.

Videogame maker THQ Inc. received court permission to split apart into the hands of the highest bidders from a bankruptcy auction that reaped nearly $72 million for the rights to such THQ titles as "Company of Heroes" and "Saints Row," Dow Jones DBR Small Cap reported today. Bankruptcy Judge Mary Walrath signed off on five purchase agreements that will give THQ a pool of money to pay off its debts before closing down its headquarters outside Los Angeles.

Hostess Brands Inc., the bankrupt maker of Wonder Bread and Twinkies, picked the team of Apollo Global Management LLC and C. Dean Metropoulos & Co. as the lead bidder for its cake brands, Bloomberg News reported yesterday. The offer becomes the stalking-horse bid for an auction of the cakes business that includes CupCakes, Ding Dongs and Ho Hos. Flowers Foods Inc., the Thomasville, Ga.-based owner of brands that include Nature’s Own and Tastykake, was earlier selected as the stalking-horse bidder for most of Hostess’s bread brands with a $360 million offer. Flowers is also the stalking-horse bidder for Hostess’s Beefsteak bread brand with a $30 million bid. That auction is scheduled for Feb. 28.

China's largest auto parts maker won U.S. government approval to buy bankrupt A123 Systems Inc., a maker of electric car batteries, despite warnings by some lawmakers that the deal would transfer sensitive technology developed with U.S. government money, Reuters reported yesterday. The sale of the lithium-ion battery maker to a U.S. unit of Wanxiang Group was approved by the Committee on Foreign Investment in the United States, a government body led by the Treasury secretary. Last month, Wanxiang's U.S. unit agreed to pay $257 million for A123's automotive battery business and related assets in a bankruptcy auction, beating U.S. rival Johnson Controls Inc. of Milwaukee.

The Special Inspector General of the Troubled Asset Relief Program (TARP) released a report yesterday saying that the U.S. Treasury needs to develop a concrete plan for exiting its 74 percent stake in auto lender Ally Financial Inc., the second-largest remaining recipient of federal bailout dollars, Reuters reported yesterday. The agency, however, must exercise "great care and coordination" with the U.S. Federal Reserve in planning its exit to make sure Ally maintains a viable presence as a lender to the U.S. auto industry, the report said. Starting in 2008, the government pumped $17.2 billion into the Detroit-based lender, then known as GMAC, to keep financing available to the auto industry, which was receiving its own bailout. Unlike General Motors and Chrysler, however, the Treasury did not require GMAC to produce a plan for dealing with its liabilities, particularly toxic subprime mortgage loans that were piling up losses. In March 2011, Ally, the one-time in-house lending unit for GM, filed for an initial public stock offering that would have allowed the Treasury to sell some of its stock, but the plan was later shelved. In May, Ally's Residential Capital mortgage unit filed for bankruptcy, and the lender launched a plan to sell international operations to speed up taxpayer repayment. Ally still owes taxpayers $14.6 billion, according to the inspector general.

Law firm Kaye Scholer and financial adviser Capstone admitted on Monday to making "mistakes" during the bankruptcy of investment management firm GSC Group Inc., but said that they should not have to forfeit more than $10 million in fees earned from their work, Reuters reported yesterday. The U.S. Trustee Program is seeking to void the firms' fees because of their mischaracterization of Robert Manzo, a Capstone contractor who was presented to the bankruptcy court as a direct employee. Kaye Scholer served as legal counsel to GSC in bankruptcy, while Capstone was the company's financial adviser. In court papers filed earlier this month, the U.S. Trustee said that the firms covered up Manzo's contractor status and fee-sharing arrangement with Capstone, which may have served to inflate their fees.

AMR Corp. Chief Executive Tom Horton is in talks about becoming board chairman if the American Airlines parent merges with US Airways Group Inc., one of a number of signs both companies are nearing a deal that could create the world's largest airline by traffic, the Wall Street Journal reported today. The negotiations are fluid and might not result in Horton's assuming that role, as he could become a vice chairman, senior adviser, take on another role or choose to retire. Horton's future is being debated by AMR creditors and others because Doug Parker, US Airways' chairman and chief executive, is widely seen as the person who would run the combined airline as CEO. US Airways, in a November merger offer, proposed Parker assume the chief executive and chairman posts in a combined airline.

A bankruptcy court on Thursday will review a proposal by MF Global’s trustee that would return 93 percent of the firm's missing money to customers, the New York Times DealBook blog reported today. The trustee who has submitted the proposal, James W. Giddens, has also identified a way that, if sent to the judge and approved, could plug the remaining shortfall for customers in the U.S. If a series of settlements with JPMorgan and other firms fall into place, people involved in the case said, Giddens could ultimately return 100 percent of MF Global's missing money. To plug the gap, he must also pursue a small pot of money sitting in MF Global's general estate, a move that would require court approval. Even if he takes that path, foreign clients will still face significant shortfalls.