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Shutterfly and Kodak are walking away from a legal battle that erupted after Shutterfly purchased Kodak’s online photo service, the Wall Street Journal reported today. During Kodak’s bankruptcy, Shutterfly scooped up Kodak Gallery in a $23.8 million deal. Shutterfly later sued Kodak, claiming that the company’s new My Kodak Moments social-networking application violated the deal’s no-compete clause. Kodak, in bankruptcy at the time, disputed Shutterfly’s claims and pledged to “vigorously defend” itself against the suit. The companies have “consensually resolved” the lawsuit, according to a one-page filing in bankruptcy court that offered no further details.

Quiznos is pushing off until May a key court hearing on its bankruptcy exit plan after unsecured creditors asked for more time to probe its restructuring strategy, the Wall Street Journal reported today. The sandwich chain labeled its chapter 11 proposal a pre-packaged plan, because the company filed for protection with support from key creditors, including senior lenders owed $444 million. Quiznos says that the chapter 11 plan itself, however, with $626 million in debt, is going to push a cramdown on unsecured creditors, forcing landlords, suppliers and other creditors to accept what it proposes to give them. Unsecured creditors, including suppliers, landlords and a franchisee, formed ranks recently in a bid to slow Quiznos's race to the bankruptcy exit. They negotiated an agreement from the company to postpone a chapter 11 plan confirmation hearing from April to May 12.

Unsecured creditors expected to go unpaid in Sbarro LLC 's second trip through bankruptcy say that the pizza chain is blatantly disregarding landlords and others owed money by the company, Dow Jones Daily Bankruptcy Review reported today. The official committee representing Sbarro's unsecured creditors on Monday filed an objection to Sbarro's proposed $20 million bankruptcy loan, which it says sets the restaurant company's restructuring on a path that hurts the committee's members. Unsecured creditors aren't expected to recover any of their claims through the restructuring.

The reorganization plan of Eastman Kodak Co., which became effective in September, created a trust to file lawsuits to generate cash for creditors, the Rochester (N.Y.) Democrat & Chronicle reported on Saturday. To kick off the process, the creditors’ trust sent almost 1,000 demand letters in November telling former suppliers they would be sued unless they voluntarily gave back so-called preferences, payments received within 90 days of bankruptcy. The trustee followed with lawsuits in January. Thursday, the trust had the bankruptcy court in Manhattan approve procedures to forestall filings that would otherwise deluge the bankruptcy court with papers in the preference suits. The trust and the defendant will share the mediator’s costs. For suits with less than $25,000 at issue, the shared cost is $1,000. The price rises on a sliding scale until it reached $3,000 for alleged preferences over $500,000.

Dish Network Corp. Chairman Charles Ergen, the largest creditor of bankrupt wireless company LightSquared, is seeking permission to sue Phil Falcone, the investor whose Harbinger Capital fund controls LightSquared, Reuters reported on Friday. In a court filing on Friday, Ergen asked the judge overseeing LightSquared's chapter 11 case for permission to bring a lawsuit alleging Falcone mismanaged the company, focusing on preserving his own investment at the expense of other stakeholders. LightSquared, majority-owned by Harbinger, went bankrupt in 2012, when the Federal Communications Commission revoked its license to operate spectrum out of concern it could interfere with GPS systems. Ergen then acquired about $1 billion of the company's senior loan debt, giving him a controlling stake in LightSquared's capital structure.

The Archdiocese of Milwaukee's reorganization plan for exiting its bankruptcy is "morally repugnant," not in the best interest of its creditors and should be rejected by creditors and the court, a committee representing clergy sex abuse victims and other creditors said in a bankruptcy court filing on Friday, the Milwaukee Journal Sentinel reported on Saturday. That objection, submitted in advance of an April 17 hearing on the plan's disclosure statement, takes issue with myriad assertions made by the archdiocese in the reorganization plan submitted to the court in February. And it telegraphs the committee's intention to continue to pursue certain assets, including $60 million the committee says was fraudulently transferred into a cemetery trust, proceeds from a $105 million capital campaign and the archdiocese's sprawling lakefront headquarters campus, known as the Cousins Center.

Anadarko Petroleum Corp. agreed to pay $5.15 billion to settle fraud claims from a 2006 acquisition, making it the largest environmental settlement won by the U.S. government, the Wall Street Journal reported today. The deal extracted a much heavier price than Anadarko had envisioned, but investors rejoiced at the resolution of a liability that could have run as high as $14 billion. The settlement spares Anadarko from further litigation involving Tronox Inc., a chemical maker once owned by a subsidiary of the company, and the U.S. Department of Justice. Tronox and federal prosecutors claimed that Kerr-McGee Corp. spun off its chemicals unit into Tronox just before being acquired by Anadarko. They alleged this move unfairly saddled Tronox with liabilities that ultimately bankrupted it in 2009 and allowed Anadarko to skirt environmental obligations.

MF Global Inc., the defunct brokerage once led by Jon Corzine, will begin final distributions to fully satisfy $6.7 billion in claims from former customers, starting tomorrow and lasting several weeks, Bloomberg News reported yesterday. “Checks are going in the mail that will make all public customers of MF Global Inc. 100 percent whole,” trustee James Giddens said yesterday. The repayment will satisfy claims of more than 26,000 securities and commodities customers. MF Global Holdings Ltd., the brokerage’s parent company, filed for bankruptcy on Oct. 31, 2011, after a wrong-way $6.3 billion bet on bonds of some of Europe’s most indebted nations. More than $1.6 billion in customer funds that should have been segregated were missing. The company listed assets of $41 billion and debts of $39.7 billion.

A federal judge is set to decide whether to impose sanctions of up to $44 million against the estate of Anna Nicole Smith’s former stepson, the National Law Journal reported today. The sanctions come in a claim originally filed by E. Pierce Marshall, the son of Smith’s late husband, Texas oil tycoon J. Howard Marshall, against the former Playboy model, who had filed for U.S. bankruptcy protection. The younger Marshall died in 2006 and Smith died of a drug overdose in 2007. Just before a hearing on Monday, U.S. District Judge David Carter in the Central District of California wrote in a tentative order that he had several “open questions” left unresolved as to the scope of sanctions he ordered last year against the younger Marshall’s estate. He has tentatively scheduled a trial on the matter for April 29.

Jon Corzine, the former MF Global Holdings Ltd chief executive, and two former colleagues failed to win the dismissal of a lawsuit by a trustee seeking to hold them responsible for the futures brokerage's rapid demise and bankruptcy, Reuters reported yesterday. U.S. District Judge Victor Marrero said on Monday that the trustee may pursue damages over claims that Corzine, former chief operating officer Bradley Abelow and former chief financial officer Henri Steenkamp breached their duties of care and loyalty to the company. "Defendants and other MF Global officers repeatedly increased the company's exposure to risky bets on sovereign debt and shuffled funds among MF Global's subsidiaries to cover a growing liquidity crisis," Marrero wrote. "These facts give rise to reasonable inferences that defendants acted in bad faith."