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Unsecured creditors of A123 Systems Inc., a bankrupt maker of batteries for electric cars that had U.S. government backing, will likely collect around 65 cents for each dollar they are owed, Reuters reported yesterday. The money largely comes from the sale of most of the company's assets to a unit of China's largest auto parts firm, Wanxiang Group. The $260 million sale sparked outrage among some members of Congress, who warned it was a transfer of sensitive technology developed with U.S. taxpayer money. However, the deal had the support of A123's committee of unsecured creditors and was approved last month by a U.S. government panel that oversees foreign investment.

Former customers of Jon Corzine's collapsed brokerage MF Global would recover most, and probably all, of their money under the latest projections by the trustee liquidating its bankrupt parent company, Reuters reported yesterday. In a court filing late on Friday, trustee Louis Freeh outlined an amended version of a plan for how to divvy up MF Global's assets and distribute them among various creditor classes. Freeh projected MF Global's U.S. broker-dealer unit could have up to a $120 million surplus, which would mean full payback for the traders whose money was frozen when the brokerage went bankrupt in October 2011. But Freeh also said the broker-dealer unit could wind up with a $6 million shortfall. While that is a small number in the context of the $1.6 billion hole customers were thought to face at the beginning of the case, and one that could likely be bridged through other sources of recovery, it is a less certain forecast than the version of the payout plan released last month.

Bankruptcy Judge Martin Glenn yesterday approved a settlement under which many former MF Global customers would get back 93 percent of the value of their accounts, a major step in the wind-down of former New Jersey Governor Jon Corzine's collapsed brokerage, Bloomberg News reported yesterday. The approval comes nearly six weeks after trustees for MF's UK and U.S. broker-dealers, as well as its parent, announced the deal to resolve billions of dollars in intercompany claims. The agreement avoids litigation in the UK that could have dragged out MF Global's liquidation for years. It will allow James Giddens, the trustee for MF's U.S. trader customers, to return another $500 million to $600 million to those customers. That would increase total payouts to about 93 percent of the value of their accounts, from the 80 percent or so most have recovered so far.

Wall Street creditors yesterday asked a U.S. judge overseeing America's biggest municipal bankruptcy to knock down a legal hurdle preventing them from pushing Alabama's Jefferson County to charge higher rates to service their sewers, a move that would help the county pay down more than $3.14 billion of defaulted debt, Reuters reported. In testimony coming a day after county officials returned from private talks with some creditors in New York, lawyers representing banks, insurers and hedge funds questioned Jefferson County Manager Tony Petelos about procedures used by county officials to set sewer rate increases in November. Those increases, totaling about 5.9 percent, were too low to pay interest and principal on the sewer debt, according to the creditors seeking an exemption to an automatic stay that bars lawsuits during a federal chapter 9 bankruptcy case. JPMorgan Chase, Bank of New York Mellon and other creditors want hikes of 22 percent or more and have requested that Bankruptcy Judge Thomas Bennett permit them to pursue a lawsuit on the rates in Alabama state court. County officials have said in legal papers that the November hike would raise system revenue by $8.5 million a year and could be followed by other increases as part of a settlement with creditors.

A bankruptcy court on Thursday will review a proposal by MF Global’s trustee that would return 93 percent of the firm's missing money to customers, the New York Times DealBook blog reported today. The trustee who has submitted the proposal, James W. Giddens, has also identified a way that, if sent to the judge and approved, could plug the remaining shortfall for customers in the U.S. If a series of settlements with JPMorgan and other firms fall into place, people involved in the case said, Giddens could ultimately return 100 percent of MF Global's missing money. To plug the gap, he must also pursue a small pot of money sitting in MF Global's general estate, a move that would require court approval. Even if he takes that path, foreign clients will still face significant shortfalls.

Some of the more than $100 million Peregrine Financial's former chief executive stole from his brokerage's clients went to pay for his divorce settlement, the trustee of the now-bankrupt brokerage said in a lawsuit late Friday against the former wife, Reuters reported yesterday. The lawsuit demands the return of more than $2.9 million in divorce payments and the disallowance of the former wife's bankruptcy court claims for an additional $2.4 million, money she says is still owed her from the divorce. Russell Wasendorf Sr, the former CEO, has pleaded guilty to embezzlement and is in an Iowa jail awaiting sentencing this Thursday.

Dreier LLP is demanding its share of the millions of dollars in fees earned from litigation that its former patent lawyers continued working on after the firm’s collapse, the Wall Street Journal reported on Saturday. Bankruptcy trustee Sheila M. Gowan, who is running Dreier’s liquidation, on Wednesday sued three former Dreier partners to recover the profits from the unfinished business the partners took with them when they left the firm. The firm dissolved and went into bankruptcy in December 2008, days after founder Marc Dreier was arrested for defrauding hedge funds and other investors out of more than $400 million.

Credit Suisse Group AG was ruled by a judge to be liable for all damages that could be awarded to noteholders suing the bank over fraud at National Century Financial Enterprises Inc., a figure investors’ lawyers put at more than $2 billion, Bloomberg News reported on Saturday. U.S. District Judge James Graham said on Friday that because New York law governs apportionment of fault in the case, Credit Suisse will be liable for 100 percent of former Chief Executive Officer Lance Poulsen’s share of damages. “If the jury finds at trial that Credit Suisse and Poulsen each committed fraud that caused plaintiff’s losses, then under New York law Credit Suisse will be liable, as to plaintiffs, for 100 percent of Poulsen’s share,” judge Graham said. Noteholders claim the bank, the placement agent, knew or should have known of a $2.9 billion fraud that led to National Century’s collapse in 2002. Ten executives of the Dublin, Ohio- based health-care financer were convicted of crimes, including Poulsen, who is serving 30 years in prison.

Just out of bankruptcy, Tribune Co. intends to drop the bulk of some 170 lawsuits that targeted senior media executives who cashed in on the going-private deal that ruined the company's finances, Dow Jones Daily Bankruptcy Review reported yesterday. The in-court announcement on Wednesday came as Tribune moved to take control of part of the flood of litigation touched off by its 2008 collapse into chapter 11, which happened less than a year after a leveraged buyout. Lawsuits will continue against upper-echelon executives such as former Chief Executive Dennis FitzSimons, who pocketed $47 million out of the deal, court papers say. Tribune's chapter 11 plan divided the litigation spoils of the failed LBO, giving creditors the right to chase the big-ticket causes of action against top-ranking insiders involved in the 2007 LBO. Most of that action is in a New York court, with creditors relying on the findings of a bankruptcy probe that found the taint of fraud on part of the LBO.

Nearly two years after Howrey went under, the trustee overseeing the defunct firm's chapter 11 case is ramping up his efforts to recover tens of millions of dollars from former partners and the firms they moved to, American Law Daily reported today. A total of 71 firms hired the 302 partners streaming out of Howrey in the months leading up to its March 2011 dissolution. Trustee Allan Diamond says that he is seeking about $100 million in clawback claims for money paid to former partners when the firm was likely insolvent, as well as an estimated up to $100 million more for "unfinished business" claims stemming from work those partners took with them to their new firms. Diamond says that he plans to take a new approach to reach settlements in the Howrey case by presenting law firms with a bundled settlement plan that includes both the claims against individual partners and the unfinished business claims against the firm. How the firm and its partners decide to divvy up the responsibility and pay the estate is up to them, he says. Also, unlike in the Dewey case, where the estate chose to recover money paid to partners only after January 2011, Diamond says that he does not plan to have a hard-and-fast date. Instead, he'll approach each settlement "with a rational model based upon the strength of my claim at various points in time."