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Jefferson County, Ala., will settle a bankruptcy claim held by school-system bondholder Depfa Bank Plc, that will save the county about $1 million a year, Bloomberg News reported yesterday. The county and the bank will sign the agreement to reduce the interest rate on about $162 million, County Commissioner Jimmie Stephens, who heads the commission’s finance committee, said on Wednesday. Commissioners approved the arrangement yesterday without discussion. The settlement is one of three signed with creditors so far in the case, Stephens said. It will not affect the continuing battle between the county and sewer warrant holders owed more than $3 billion.

A federal bankruptcy judge has given the federal government the nod to pursue $22 million in claims against two entities controlled by former nursing home executive Antonio Giordano's children, the Providence Journal reported today. Bankruptcy Judge William Hillman, sitting in for Judge Diane Finkle, gave the government the approval to seek the money in U.S. District Court from Potter Road Trust and Evergreen Estates Managing Corp. Acting on behalf of the U.S. Department of Housing and Urban Development and the IRS, the government sought the go-ahead following U.S. District Court Chief Judge Mary Lisi's ruling ordering Giordano to pay $13.8 million for diverting millions of dollars from two failing nursing homes and her blistering rebuke that he used the projects as "his own personal piggy bank." The IRS also seeks $8.9 million in payroll taxes.

The Internal Revenue Service said that bankrupt Overseas Shipholding Group Inc., the largest U.S. tanker operator, owes $463 million in U.S. taxes and interest, Bloomberg News reported yesterday. The company owes $27.9 million in interest on $435.1 million of taxes, the IRS said in papers filed on Monday with Kurtzman Carson Consultants LLC, the agent processing claims for Overseas. The IRS labeled it an unsecured priority claim, meaning that the agency wants it paid ahead of other unsecured and lower-ranking debts. Overseas, based in New York, filed for bankruptcy last year after global shipping rates fell and the company gave up trying to win a federal loan guarantee. Overseas listed assets of $4.15 billion and debt of $2.67 billion in its chapter 11 petition.

Ten people were arrested yesterday at a protest outside the St. Louis headquarters of Peabody Energy, one of the companies the union accuses of orchestrating business deals that bankrupted Patriot Coal, the Associated Press reported yesterday. This was the second time in two weeks that the United Mine Workers of America organized a huge protest to draw attention to the possible loss of pension and health care benefits for about 20,000 retired miners and dependents. The union is suing Peabody and Arch Coal in West Virginia, claiming they set Patriot up to fail so it would have to shed the pension and health care benefits. After the spinoff, Patriot acquired mines that Arch Coal spun off into Magnum Coal. Patriot now argues the legacy costs it inherited are "unsustainable." The lawsuit argues Arch and Peabody are still responsible for those benefits under the federal Employee Retirement and Income Securities Act. The UMWA contends that the companies knew that the cyclical nature of the industry would inevitably lead to Patriot’s inability to pay for those liabilities.

The Archdiocese of Milwaukee's bankruptcy is at risk of becoming the first of its kind in the nation to fail to compensate sex abuse victims equitably, creditors say in a court filing this week, the Milwaukee Journal Sentinel reported yesterday. If the archdiocese is as broke as it said it was in a recent court motion, the creditors insist it should begin selling properties, tap what could be $150 million in its cemetery and Faith In Our Future funds and aggressively pursue newly discovered insurance policies that may cover its handling of the sex abuse crisis. The creditors are responding to an archdiocese motion asking Bankruptcy Judge Susan V. Kelley to let it halt most payments of its legal and professional fees, and fold those costs into its reorganization plan, arguing that they will soon hinder its ability to pay its monthly bills. Creditors blame the church's financial troubles on its unprecedented strategy of objecting to hundreds of the sex-abuse claims filed, and say failure to pay its fees would bar it from developing a reorganization plan.

BankUnited N.A., a secured creditor in Universal Health Care Group Inc.'s chapter 11 case, is asking the court to throw the case out, saying that if it cannot proceed with a foreclosure sale, the company's value will "vaporize," Dow Jones DBR Small Cap reported today. BankUnited, which is representing secured noteholders owed $36.5 million, says that as a result of Universal's chapter 11 filing, the foreclosure sale was halted, but the state's authority to appoint a receiver who, it says, will liquidate Universal, is not affected.

For more information about health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition.

The U.S. unit of Nortel Networks Corp., the defunct telecommunications company, asked a judge to schedule a November trial on whether to throw out $2.67 billion in claims filed on behalf of 38,000 U.K. retirees, Bloomberg News reported on Saturday. The request came after a mediator gave up on settlement talks last month, saying that bondholders, retirees and other creditors failed to agree on how to split $9 billion in cash. Nortel Networks Inc. asked the judge overseeing its slice of the multi-country bankruptcy to first decide whether the U.K. retirees have a legitimate claim to the money before deciding how best to divide it. Retiree representatives asked the judge to focus instead on how to split cash among Nortel’s units in the U.S., Europe and Canada.

A proposed liquidation plan for MF Global Holdings Ltd. fails to take into account that its finance unit is being hit twice for the same debt, undercutting what some creditors might recover, JPMorgan Chase & Co said in a court filing, Reuters reported on Friday. Creditors of the finance unit could get up to 47.7 percent of their money if the double liability were voided, according to the filing by JPMorgan, which is an agent and lender under the unit's $1.2 billion liquidity facility. That is more than the maximum 33.6 percent that those creditors would receive under the plan proposed earlier this month by Silver Point Capital, Knighthead Capital and Cyrus Capital Partners in conjunction with trustee Louis Freeh.

A group of retired Dewey & LeBoeuf partners whose objections threatened to drag out or even derail the defunct firm's bankruptcy proceedings have reached a settlement that Dewey lawyers say should clear the way for the speedy approval of a pending chapter 11 plan, Am Law Daily reported today. The settlement, detailed in Thursday court filings, has been offered to 125 retired Dewey partners—most of them tied to legacy firm LeBoeuf, Lamb, Green & MacRae—who are being asked to repay the bankruptcy estate a portion of money they received from the firm in 2011 and 2012, including tax advances, payments from non-qualified retirement plans, and Of counsel and special counsel compensation. The retired partners also agreed to forsake future claims against the Dewey estate; abandon some $80 million in proofs of claim filed in the bankruptcy; assign any claims against former Dewey partners, employees, or firm leaders to the estate; and drop their appeal of a $70 million partner contribution plan signed on to by a majority of the firm's former partners. The settlement requires the approval of Bankruptcy Judge Martin Glenn, who has already approved the partner contribution plan.

Negotiations between the bankrupt city of San Bernardino, Calif., and the state's public pension fund over the unprecedented suspension of pension payments by the city have failed to produce an agreement before a crucial court hearing, Reuters reported yesterday. Senior officials at the California Public Employees Retirement System, the largest U.S. public pension fund and San Bernardino's biggest creditor, have met with city budget officials and held telephone conversations with the city's mayor over the past several weeks. CalPERS said that San Bernardino still has not provided crucial financial information, or proposed a plan for resuming its twice-monthly, $1.2 million payments to the fund. The judge overseeing San Bernardino's request for bankruptcy protection told the city in December that it must provide more financial information to its creditors. CalPERS says that its efforts to help the city produce the information have not been as productive as it expected, but still hopes something can come from negotiations before the next court hearing on Tuesday.

For more on municipal financial distress and chapter 9 trends, be sure to pick up a copy of Municipalities in Peril: The ABI Guide to Chapter 9, Second Edition.