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A federal bankruptcy judge could decide how much compensation families of the victims killed by the train crash in Lac-Megantic, Quebec, receive, the Maine Sun Journal reported Sunday. A motion filed last month in the Montreal, Maine and Atlantic Railway’s bankruptcy petition asked U.S. Bankruptcy Judge Louis Kornrich to appoint a committee to represent wrongful death and personal injury claimants. By allowing the bankruptcy court to handle compensation to victims, the railroad could avoid dealing with dozens of individual wrongful death lawsuits with “verdicts totaling hundreds of millions of dollars,” Bangor lawyer George Kurr said in the motion. MMA filed for chapter 11 bankruptcy in U.S. Bankruptcy Court in Bangor and in Canada on Aug. 7, a month after one of its trains rolled driverless down a hill before derailing in the middle of the town of Lac-Megantic, causing a fiery explosion that killed 47 people. The estates of 33 of the victims, which have filed lawsuits against the railroad in Canada, joined in submitting the motion.

Overseas Shipholding Group Inc. said yesterday that it may owe $460 million or more to the Internal Revenue Service, a finding that is likely to upset its chapter 11 bankruptcy case, Dow Jones Newswires reported yesterday. Revised financial statements filed with the Securities and Exchange Commission said the shipping company's analysis and conversations with the IRS have led it to believe that the "actual amount of the tax" it will ultimately have to pay "will be significant and could be as high as $460,000,000 or potentially higher." The company intends to assert its available defenses "vigorously," according to the SEC filing. However, the filing may be bad news for bank lenders owed $1.5 billion and investors in the company's debt, who have been counting on Overseas Shipholding overcoming a $463 million claim the IRS filed in its chapter 11 case.

Bankruptcy Judge Allan Gropper yesterday rejected a bid by Eastman Kodak Co. shareholders to set up an official committee to represent their interests, as the company prepares to seek court approval next Tuesday to emerge from chapter 11, Reuters reported yesterday. Judge Gropper said that there was no evidence that Kodak or its creditors were "hiding value" from shareholders, who would lose their investments under the proposed reorganization. He also said the costs of setting up a committee, which like Kodak's unsecured creditors' committee would have negotiating powers, are "unreasonable" in light of the possible benefits.

The remains of Lehman Brothers Holdings Inc. want a bankruptcy judge to end Citigroup Inc.'s "interest rate arbitrage" with respect to their rival claims on $2 billion in cash Lehman deposited at Citigroup about three months before it collapsed, Dow Jones Daily Bankruptcy Review reported today. In a court filing on Wednesday, lawyers for Lehman asked Bankruptcy Judge James Peck to step in and "provisionally allow" Lehman to use the $2 billion in cash in the account to satisfy Citigroup 's claims against the failed investment bank.

Government lawyers have moved to block Exide Technologies Inc. from abandoning miscellaneous assets, arguing that the troubled battery maker can't walk away from its duty to clean up contaminated sites, Dow Jones Daily Bankruptcy Review reported today. The U.S. Environmental Protection Agency invoked laws protecting public health and safety to argue against a blanket court order authorizing Exide to scrap "de minimis" assets it no longer needs or sell them without all the formalities of a bankruptcy sale.

Against criticism from the U.S. government's executive-bonus watchdog, attorneys for American Airlines's parent company defended the $20 million severance payment promised to departing Chief Executive Tom Horton, arguing that the bill would be paid once the company merges with US Airways Group Inc., Dow Jones Daily Bankruptcy Review reported today. In court papers filed on Thursday, attorneys for AMR Corp. argued that the company has the power to promise the severance payment to Horton as part of its chapter 11 reorganization plan because the payment money would come from "the surviving entity of the merger with a new asset base."

UBS AG, Switzerland’s largest bank, agreed to pay $120 million to settle claims by investors in Lehman Brothers Holdings Inc. securities in a lawsuit tied to the investment bank’s 2008 collapse, Bloomberg News reported on Friday. UBS was accused of violating federal securities laws in underwriting and selling the securities to investors, who claimed that offering materials contained misleading information about Lehman Brothers’ financial condition. The settlement, disclosed on Thursday in a court filing, compares “favorably” with other recoveries stemming from the credit crisis, the plaintiffs said. Lehman Brothers filed for bankruptcy in September 2008. The settlement, which requires court approval, represents a recovery of 13.4 percent of the total face value of securities at issue, or about $896 million, without taking into account UBS’s defenses and rights of offset, according to the court filing.

Mortgage lender Residential Capital LLC is facing a number of objections from the U.S. Trustee Program, its pension insurer and other creditors to the outline of its plan to exit bankruptcy protection, Dow Jones Newswires reported on Friday. U.S. Trustee Tracy Hope Davis took aim at "impermissible payments" earmarked for some bondholders' and investors' lawyers and financial advisers, in a court filing on Thursday. Davis is also concerned about the broad releases from civil lawsuits granted to Ally Financial Inc. and its managers as part of its bankruptcy deal with its mortgage subsidiary. Ally, which isn't under chapter 11 protection, has agreed to pay $2.1 billion to its mortgage subsidiary and its creditors in return for protection from litigation over ResCap's mortgage business. The broad scope of those releases has caught the attention of several U.S. government officials.

Clergy abuse victims may be going after a district judge on undisclosed grounds for recusal in the bankruptcy of the Archdiocese of Milwaukee, as Bloomberg Law’s Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss in leading off their new video. To watch the video, please click here: http://www.youtube.com/watch?v=Fk4-Tq-raeQ&list=PL_500m6Wb0wjRwfUjzisq9…

Bankruptcy Judge Susan V. Kelley ruled yesterday that the Archdiocese of Milwaukee (Wis.) must release to its bankruptcy creditors documents that could show whether a federal judge, who sided with the church on a key issue involving its cemeteries, might have had a conflict of interest that should have been disclosed, the Milwaukee Journal Sentinel reported today. Kelley issued the ruling after a brief hearing yesterday, stressing that it was not a commentary on U.S. District Judge Rudolph T. Randa’s July 29 ruling or whether he should have recused himself from the case. Judge Randa ruled last week that forcing the church to use even some of the more than $50 million it set aside in a trust for the perpetual care of cemeteries to pay its bankruptcy debts — primarily sex abuse settlements — would substantially burden its free exercise of religion under the First Amendment and a 1993 law aimed at protecting religious freedom. Judge Randa’s ruling, which overturned an earlier decision by Judge Kelley, was a key victory for the archdiocese in that it eliminated one of the last major assets available for a settlement with sex abuse victims who filed claims in the bankruptcy.