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The owner of the Scrub Island resort in the British Virgin Islands is fighting its lender to use U.S. bankruptcy protection to rework its more than $130 million worth of debt, the Wall Street Journal reported today. Lawyers for Scrub Island Resort, Spa & Marina's owner said that bank officials shouldn't win their request to dismiss the resort's bankruptcy case, which was filed on Nov. 19 in U.S. Bankruptcy Court in Tampa, Fla., because of the resort's location in the Caribbean sea. In court papers, the resort owner's lawyers said that its headquarters have been located in Tampa since 2005 and that it uses U.S. bank accounts to pay some of its 140 workers. Last month, FirstBank Puerto Rico officials who said they're owed $120 million from the resort owner asked Judge Michael G. Williamson to throw out the bankruptcy case, which has gotten in the way of its attempt to foreclose on the 230-acre island and its 53-room resort.

Bankrupt mortgage lender Residential Capital LLC has struck a deal with a class of bondholders to resolve the group's objection to its plan to exit bankruptcy, Reuters reported yesterday. In court papers filed yesterday, ResCap outlined a new exit plan which includes a $125 million payment to the bondholder group to settle its demands for millions of dollars in interest payments. Implementation of the plan would allow ResCap to begin paying back creditors who include owners of residential mortgage-backed securities that collapsed in the 2008 mortgage crisis. It would also allow former parent Ally Financial, which is now part-owned by U.S. taxpayers, to focus on repaying the federal government for a $17 billion bailout during the crisis. Ally had contributed $2.1 billion to fund recoveries for ResCap creditors, a cornerstone of the plan.

A bipartisan group of U.S. House and Senate members is seeking to make it easier for investment fraud victims to seek compensation, after investors in Allen Stanford's Ponzi scheme were deemed ineligible under current law to file claims, Reuters reported yesterday. The bill, introduced by Sens. David Vitter (R-La.), Charles Schumer (D-N.Y.), Reps. Scott Garrett (R-N.J.) and Carolyn Maloney (D-N.Y.), would bestow greater powers on U.S. securities regulators to oversee the process of determining whether customers of failed brokerages qualify for compensation. The legislative proposal comes as the Securities and Exchange Commission awaits a crucial decision from a U.S. appeals court over the fate of the Stanford victims. The SEC is trying to get the court to force an industry-backed fund that protects investors to start court proceedings so Stanford victims can file claims to recover a least a portion of the millions they lost. The Securities Investor Protection Corp., or SIPC, which administers the fund, has refused the SEC's request, saying Stanford investors do not meet the legal definition of "customer" under the federal law designed to protect investors if their brokerage collapses.

Residential Capital LLC, the defunct mortgage company, opened a weeklong bankruptcy trial in which it will fight hedge funds including Aurelius Capital Management LP over a liquidation plan that resolves more than $100 billion in claims, Bloomberg News reported yesterday. The company is asking Bankruptcy Judge Martin Glenn to approve a plan to distribute billions of dollars to creditors that ResCap raised by liquidating assets. The assets included a mortgage platform bought by Ocwen Loan Servicing LLC and Green Tree Servicing LLC for $3 billion. All the company’s big creditors voted for the bankruptcy plan except for a group of hedge funds holding about $1 billion in notes, ResCap’s lead attorney, Gary Lee, said today in court. ResCap, which is owned by Detroit-based Ally Financial Inc., filed for bankruptcy in May 2012 with plans to sell its mortgage unit and other assets. The company completed those sales this year, raising about $4.5 billion.

Cengage Learning Inc.'s recently proposed bankruptcy-exit plan, meant to resolve a number of creditor protests, drew fire from unsecured creditors and junior bondholders, which insist that the plan is fatally flawed, Dow Jones Daily Bankruptcy Review reported today. The company's unsecured creditors' committee said that unless the company incorporates these changes it would seek to block approval of the disclosure statement. Although the text alterations will satisfy the creditors' committee in the short term, according to court documents, the committee is requesting major changes to the plan before Cengage receives final approval in February.

Bankrupt wireless communications firm LightSquared Inc. has filed a lawsuit accusing Dish Network Corp. and its chairman, Charles Ergen, of improperly trying to take control of LightSquared's broadband spectrum, Reuters reported yesterday. The lawsuit, filed in bankruptcy court on Friday, is an effort to revive an earlier case by LightSquared's controlling stakeholder, Phil Falcone's Harbinger Capital Partners, that was thrown out last month. LightSquared alleges that Dish, Ergen, and other Ergen-controlled entities made improper trades and violated a key credit agreement in order to become LightSquared's largest creditor, with the intention of taking control of LightSquared's spectrum, the airwaves used for wireless communications.

Lehman Brothers Holdings Inc.'s bank subsidiary is suing the Massachusetts Department of Transportation (MassDOT) over soured swaps and options, claiming the state authority manipulated the market-quotation process after Lehman's bankruptcy to reap a windfall of more than $30 million, Dow Jones Daily Bankruptcy Review reported today. Woodlands Commercial Corp., once known as Lehman Brothers Commercial Bank, is suing the agency to recover the tens of millions it says it is owed on half dozen interest rate swaps and option transactions.

A bankruptcy judge on Friday said that a group of Residential Capital LLC's bondholders aren't entitled to interest accrued since the mortgage servicer's bankruptcy filing, at least as of now, Dow Jones Newswires reported on Friday. Bankruptcy Judge Martin Glenn said that ResCap's junior secured noteholders are owed $1.9 billion and thus aren't "oversecured," after the first phase of a trial held last month. If the bondholders are deemed oversecured — which could still happen — they'd be entitled to interest accrued since ResCap's May 2012 bankruptcy filing, which they say is being racked up at $250 million per year. Another phase of the trial could still alter the numbers and render the creditors oversecured. But Judge Glenn said that the bondholders were wrong when they said they are owed $2.22 billion and are actually undersecured by $318 million. He did deal ResCap a blow by saying that the company can't collect $143 million in expenses related to the loans.

New court documents shed light on Tesco PLC's apparent generosity to creditors of the U.S. grocery chain it is seeking to ditch, Fresh & Easy Neighborhood Market, Dow Jones Newswires reported yesterday. Fresh & Easy's U.K. parent drained nearly $214 million in cash out of the U.S. venture in the year before dumping it into bankruptcy, while complaining it was losing an average $22 million per month. Unless another bidder steps up soon with a better offer, Tesco is financing a sale of the bulk of the business to the Yucaipa Cos. It is a deal that will keep stores open, save jobs, and provide suppliers with a continuing customer. Tesco has said in court documents that it put more than $3 billion in debt and equity into the venture, an effort to break into the competitive market of selling fresh food in California, Nevada and Arizona just as those areas were being slammed by the recession.

Lehman Brothers Holdings Inc. has sued Credit Suisse Group AG, seeking to reduce "inflated" bankruptcy claims by roughly $1.1 billion, and also recover about $150 million from the Swiss bank, Reuters reported yesterday. Lehman accused Credit Suisse of exaggerating claims related to the early end of tens of thousands of derivatives transactions. Lehman calculated that the $1.19 billion in Credit Suisse claims at issue may be worth just $74.6 million. Lehman also estimated that Credit Suisse owes it roughly $150 million on some international transactions.