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A bankrupt British Virgin Islands luxury resort owner was assailed by lender FirstBank Puerto Rico for an allegedly “false and misleading” court filing saying a settlement had been reached over the bank’s claims, Bloomberg News reported today. The resort owner, Scrub Island Development Group Ltd., filed a restructuring proposal on Wednesday in U.S. Bankruptcy Court in Tampa, Fla., saying that it had an agreement with FirstBank on the treatment of almost $120 million in claims. The statements in the proposed reorganization plan and an accompanying explanatory disclosure statement are “completely false and misleading” and the bank “never agreed to the terms of this nature,” said Lawrence Odell, FirstBank’s general counsel. FirstBank filed an initial objection to the plan making similar statements. Under the proposed plan as filed by Scrub Island, the bank would get a new claim of $37.5 million against the reorganized company, which would be reduced to $30 million with an initial cash payment and then paid over five years. FirstBank would get $84.9 million in unsecured deficiency claims that would receive no recovery.

A member of a committee helping to oversee LightSquared's restructuring said on Wednesday he believes the company's plan to subordinate the claims of its largest creditor, Dish Network Corp Chairman Charles Ergen, is fair, Reuters reported yesterday. Testifying in the U.S. Bankruptcy Court in New York, Christopher Rogers, a member of the independent special committee, said that the plan is not an attempt to punish Ergen for what LightSquared views as his surreptitious methods of acquiring debt. LightSquared filed for chapter 11 in 2012 after the Federal Communications Commission revoked its license to build a planned wireless network on concerns it could interfere with GPS systems. Ergen bought up about $1 billion worth of LightSquared's senior loan debt, despite an agreement between LightSquared and its lenders that barred competitors from acquiring the company's debt. Ergen said that he bought the debt in his personal capacity, not on behalf of Dish.

A U.S. appeals court on Wednesday that commodities brokerage INTL FCStone Inc. can keep a $15.6 million payout of customer funds related to the bankruptcy of Sentinel Management Group in 2007, Reuters reported yesterday. The decision overturned a federal district court's previous order that New York-based FCStone return the money to the trustee overseeing Sentinel's bankruptcy. The previous ruling said FCStone had received too large a payout compared with other former customers of Sentinel, an investment adviser and futures broker. However, the appeals court said that fund transfers to FCStone before and after Sentinel's bankruptcy were proper.

Medical transcription company M*Modal filed for bankruptcy protection today as the firm owned by J.P. Morgan Chase & Co's private-equity arm seeks to reduce debt, Reuters reported today. M*Modal, which was taken private by One Equity Partners in a $1.1 billion all-cash deal in 2012, listed assets and liabilities in the $500 million to $1 billion range in its bankruptcy petition. M*Modal said it is in "constructive discussions" with its lenders and bondholders regarding the terms of a consensual financial restructuring plan. The company said it expects cash on hand, combined with funds generated from ongoing operations, to provide sufficient liquidity to continue operating through the restructuring process.

Philip Falcone’s LightSquared Inc. will probably get U.S. regulatory approval to use its wireless spectrum by 2015 and may buy more airwaves, a member of a special committee of the company’s board told a bankruptcy judge, Bloomberg News reported yesterday. LightSquared, based in Reston, Va., sought bankruptcy protection in 2012 after the Federal Communications Commission blocked the company’s wireless service, saying it might interfere with civilian and military global-positioning-system navigation equipment. “I believe they will allow the spectrum to be used terrestrially,” Christopher Rogers, a member of a committee specializing in airwave issues, told Bankruptcy Judge Shelley Chapman. He was testifying at the outset of what may be a multi-day hearing in which LightSquared is seeking final approval of its plan to exit bankruptcy. Rogers cited two meetings with the FCC in December. The agency also has some airwaves right next to LightSquared’s slice of the spectrum, and the company could make a bid should they go up for auction, Rogers said. The National Oceanic and Atmospheric Administration currently uses some of that spectrum.

Eastman Kodak Co. said that its loss narrowed in the fourth quarter, though both of the company's segments posted a decline in net sales, the Wall Street Journal reported today. For 2014, Kodak forecast full-year revenue between $2.1 billion and $2.3 billion, and said that it expects between a $40 million loss and break-even earnings from continuing operations. The Rochester, N.Y.-based company emerged from chapter 11 restructuring in September. Kodak, which struggled as physical film was largely replaced by digital photography, filed for bankruptcy protection in January 2012, reducing its head count and shedding unprofitable business units during the process. Now the company is focused on commercial imaging.

Bill-collection firm Deca Financial Services LLC missed a March 17 deadline to come up with more than $11 million to avoid involuntary chapter 11 reorganization sought by its creditors, the Indianapolis Business Journal reported yesterday. That means trustee Ellen Fujawa will take control of the firm, which in 2012 was named one of the fastest growing Indiana companies and offered $2.5 million in conditional tax credits from the Indiana Economic Development Corp. for its job-creation plans. Deca, founded in 2010, told the bankruptcy court earlier this month that it had lined up financing to pay creditors to avoid being forced into chapter 11. But David J. Tipton, an attorney for the company, said that the plan hit a snag when a potential purchaser of company land pulled out at the last minute. Earlier this month, Bankruptcy Judge Robyn Moberly told Deca if it failed to make the deadline the trustee would immediately assume control of the company.

The collapse of the Jacoby & Meyers Bankruptcy LLP law firm, which was formed in 2012 by two consumer law giants, has mobilized some unpaid creditors to push for their final payments, the Wall Street Journal reported yesterday. LegalZoom.com Inc., which says it is owed about $1 million for leads it provided to Jacoby & Meyers Bankruptcy last fall, joined several other creditors to file an involuntary bankruptcy petition against Jacoby & Meyers Bankruptcy last week. The move is meant to pressure the assignee, Chicago financial professional Robert Handler, to investigate the firm’s former managers and to look other places for potential lawsuits that might win money — some of which could repay the firm’s bills. According to lawyers who are representing creditors, Handler said that the firm will pay what debts it could from its few remaining assets: contingency fees receivable, furniture and equipment. If the firm enters bankruptcy, their lawyers would be given more power to recover money, and it would provide more transparency and information for creditors, lawyers for creditors said in court papers.

Bankruptcy Judge Kevin Gross signed a final decree on Monday ending the Los Angeles Dodgers' time in bankruptcy court, the Los Angeles Times reported today. The bankruptcy cases of the Dodgers and related entities "are hereby closed," Gross wrote in an order that ended the team's stay in bankruptcy court at 995 days. Frank McCourt, the Dodgers' former owner, took the team into bankruptcy on June 27, 2011, after Commissioner Bud Selig rejected a proposed television contract that would have served as McCourt's financial lifeline. After Judge Gross ruled that he would not allow McCourt to turn the bankruptcy proceedings "into a trial on the commissioner," McCourt agreed to sell the team — with the court, not Selig, having final authority to approve the sale. On March 27, 2012, McCourt sold the Dodgers for $2 billion — a record sale price for a North American sports franchise — to Guggenheim Baseball Management, a group led by Mark Walter, Stan Kasten and Magic Johnson.

Freedom Industries President Gary Southern requested an order in bankruptcy court documents filed on Saturday to collect paychecks for work following the company's Jan. 17 chapter 11 filing, the Associated Press reported yesterday. The documents say that Southern earns a $230,000 salary. He last received a paycheck covering services through Jan. 19. Southern is requesting that his paychecks be negotiated and issued until Freedom can appoint a chief restructuring officer. Court papers say he worked 46 straight days through Feb. 26.
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For further analysis of the Freedom Industries bankruptcy, including an examination of the company’s environmental liabilities in chapter 11, be sure to listen to ABI’s recent podcast featuring James Redwine: http://news.abi.org/podcasts/145-examining-recent-cases-involving-envir…