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U.S. business aircraft builder Hawker Beechcraft expects to emerge from its chapter 11 protection from creditors by year-end and will be a much stronger company than it is now, Dow Jones Newswires reported yesterday. Shawn Vick, executive vice president-customers of Hawker Beechcraft, said that the company will see its $125 million debt services removed by the agreement with its financial investors to holders of its $2.5 billion of debt to exchange their debt for equity. At the emergence from chapter 11, he said, Hawker Beechcraft may take on a small amount of debt.

Houghton Mifflin Harcourt Publishers Inc. has reached a deal with more than 70 percent of its creditors to cut $3.1 billion in debt as it faces a lagging textbook market due to drops in educational funding, Reuters reported yesterday. The publisher said that it plans to restructure through a pre-packaged chapter 11 bankruptcy, a process that it said will have no impact on its day to day operations. Houghton Mifflin said that the restructuring is likely to be completed by the end of June 2012. The Boston-based publisher said a majority of its senior secured lenders and bondholders agreed to the plan to convert outstanding long-term debt to equity and create a capital structure to support its business objectives.

American Airlines parent AMR Corp. will explore strategic options that include a possible sale under an agreement with the unsecured creditors committee in its bankruptcy case, Bloomberg News reported on Saturday. The panel pressed for such an accord so AMR's review of its options would include studying a merger with US Airways Group Inc., which is considering whether to mount a takeover bid. The process would begin this summer, before the September expiration of AMR's exclusive right to propose a reorganization plan. Fort Worth, Texas-based AMR said that the accord calls for assessing "potential consolidation scenarios" without committing to pursuing a deal.

Bankruptcy Judge Cecilia G. Morris on Friday turned down hedge-fund manager Claren Road Asset Management's demand for unfettered public access to all of a scathing examiner's report into Dynegy Holdings LLC's pre-bankruptcy dealings, saying that the desire for public access were outweighed by Dynegy management's needs of confidentiality, Dow Jones Newswires reported on Friday. While reading her ruling, Judge Morris repeatedly capped sentences with the phrase "at this time," echoing arguments by Dynegy lawyers that full public access--if deemed necessary--could be determined at a later date. Independent examiner Susheel Kirpalani's report, released in March, denounced Dynegy Holding's transfer of its coal assets before its bankruptcy proceedings to publicly traded parent Dynegy Inc. His findings threw Dynegy Holdings' already contentious chapter 11 case into more disarray but, after mediation sessions with Kirpalani himself, the company last month disclosed a deal with most objecting groups to shift the coal assets back to creditors.

Philip Falcone's telecom start-up LightSquared edged closer to a bankruptcy filing as the hedge fund manager was far from an agreement with creditors, Reuters reported yesterday. Falcone has until today at 5 p.m. ET to reach an agreement or face a default on a $1.6 billion loan. Creditors have been negotiating to restructure LightSquared's 96 percent ownership by Falcone's Harbinger Capital Partners. Debt holders could have declared a default on the loan, which would have forced a bankruptcy, if there was no agreement by April 30. The deadline has been extended twice.

Dynegy Inc. posted a narrower quarterly loss as it produced more power from cheap natural gas rather than coal, Reuters reported yesterday. The company last month resolved major disputes with creditors that could put its unit Dynegy Holdings LLC a step closer to emerging from bankruptcy. Dynegy has reached an agreement in principle with creditors holding more than $2.5 billion of claims against the unit, which filed for bankruptcy protection on Nov. 7. A hearing on the settlement agreement has been scheduled for June 1, Dynegy said yesterday.

Pfizer Inc.'s bankrupt Quigley Co. unit will continue its eight-year bankruptcy, and seeks to challenge a federal appeals court ruling, a Pfizer lawyer said, Bloomberg News reported yesterday. Jay Goffman told Bankruptcy Judge Stuart Bernstein yesterday that Pfizer may challenge a higher court's ruling in April that found Pfizer is not entitled to protection from some asbestos claims related to Quigley. Pfizer also plans to proceed with Quigley's bankruptcy, and seeks to have it exit court protection in September. Quigley, founded in 1916, made three products for the steel industry from the 1940s to the 1970s that contained asbestos. Pfizer bought Quigley in 1968, and the company stopped most operations in 1992, filing for bankruptcy in 2004. Pfizer has said that it never made or sold any Quigley products, and some claimants had not released Pfizer from alleged "derivative liability." Judge Bernstein had ruled in bankruptcy court that Quigley's chapter 11 case barred certain lawsuits against Pfizer. A May 2011 decision in district court reversed the order, and Pfizer had appealed that ruling.

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.

U.S. fashion designing house Betsey Johnson LLC, which filed for chapter 11 protection last month, has commenced a going-out-of-business sale at its stores and outlets, Reuters reported yesterday. Gordon Brothers Group and Hilco Merchant Resources are jointly running the sale on Betsey Johnson's behalf. The fashion house had listed total assets of $21.3 million and total liabilities of $15.4 million at the end of 2011, according to the company's balance sheet that was filed in court last month. Betsey Johnson retail stores worldwide, which also sells products to department store operators like Nordstrom Inc and Macy's Inc, said the sale is taking place at its U.S., Canada and UK locations. The company will honor gift cards until June 1.

More than 200 former AFA Foods Inc. employees are suing the company for 60 days' worth of pay and benefits, saying that the meat-processing company violated a federal law requiring employers to give notice before laying off a substantial number of workers, Dow Jones DBR Small Cap reported today. According to court documents filed yesterday, the employees were laid off on April 6, four days after AFA Foods filed for bankruptcy.