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CME Group Inc. plans next month to begin paying $2 million to former clients of Peregrine Financial Group, the failed futures brokerage looted for years by its now-jailed founder, Reuters reported yesterday. The payments will go to nearly 200 farmers, ranchers and cooperatives who traded on CME's exchanges. The payouts are CME's first from a fund it established in response to the collapse of MF Global last October, which left a $1.6 billion shortfall in customer funds and shook confidence in an industry where the safety of customer money had long been an article of faith.

Contractors rather than banks are entitled to receive a $100 million payout from the Fontainebleau Las Vegas bankruptcy case, the Nevada Supreme Court said in an opinion yesterday, VegasInc.com reported yesterday. Attorneys said that the opinion is significant for Nevada contracting companies because it gives them more protections in situations like those involving the $2.9 billion Fontainebleau, a casino resort that failed while still under construction in 2009. The failure left lenders, bondholders and contractors owed some $2.1 billion and caused hardships for some contractors that had their own bills to pay. With just $100 million available to pay Fontainebleau debts after the project was auctioned to investor Carl Icahn during its bankruptcy, court fights have been raging around the country over that money, as well as claims that Fontainebleau’s nonbankrupt developer misled lenders and is liable for their losses.

Solyndra, the solar panel maker that failed despite a $528 million federal loan, won court approval yesterday for its plan to repay creditors and end its politically charged bankruptcy after a judge overruled objections by the U.S. government, Reuters reported. Bankruptcy Judge Mary Walrath rejected the government argument that the plan was improper because its main purpose was to provide tax breaks. Venture capital firms Argonaut Private Equity and Madrone Capital Partners will control Solyndra's tax breaks, known as net operating losses (NOLs) that are potentially worth $341 million after the bankruptcy. "It is clear in this case the bankruptcy and the reorganization dealt with many other things than the value of the NOLs or the preservation of the NOLs," Judge Walrath said.

Ocwen Financial Corp. and Walter Investment Management Corp. have teamed up to top Nationstar Mortgage Holdings Inc's starting bid for Residential Capital LLC's mortgage business, ensuring a bankruptcy auction goes ahead next week, Reuters reported on Friday. The consortium offered to buy the mortgage business for $40 million more than Nationstar's $2.45 billion opening bid, though Nationstar was expected to make an updated bid. Several other potential buyers that had shown interest in the business, including private equity firm Blackstone Group and technology company IBM Corp, were not expected to submit offers, potentially leaving Nationstar and the Ocwen-Walter group as the main contenders.

Hawker Beechcraft Inc., the business-jet maker partly owned by Goldman Sachs Group Inc., plans to emerge from bankruptcy as a stand-alone company after a sale to Superior Aviation Beijing Co. collapsed, Bloomberg News reported yesterday. A review of strategic alternatives for the Hawker jet line is under way, and that business may close "if no satisfactory bids are received," according to the company. The post-bankruptcy company would be renamed Beechcraft Corp. and focus on planes including civilian turboprops and military trainers. The failed $1.79 billion deal with Superior may rekindle interest in Wichita, Kansas-based Hawker.

A bidding war for A123 Systems Inc., the electric car battery maker that has filed for creditor protection, broke out in bankruptcy court between a spurned Chinese suitor and an American auto-parts maker, the Wall Street Journal reported today. A lawyer for Chinese auto-parts maker Wanxiang Group Corp. indicated at an initial hearing in Wilmington, Del., that the company is still interested in A123 despite a $125 million offer from Milwaukee-based Johnson Controls Inc. for the battery maker's auto business. The disclosure sets up a fight between Wanxiang and Johnson Controls, which has agreed to provide A123 with $72.5 million in debtor-in-possession financing to fund the bankruptcy case. D.J. "Jan" Baker, A123's bankruptcy attorney, said that the company would seek approval of the Johnson Controls loan only on an "interim" basis in order to shop for better financing terms.

Solyndra LLC, the solar-panel maker that received a $535 million U.S. Energy Department loan guarantee before going bankrupt, won’t be able to provide lenders ranking ahead of the government with a full recovery, the company's financial adviser Eric Carlson said yesterday, Bloomberg News reported. The failed solar-panel maker generated about $117 million from assets sales, including the proposed sale of its manufacturing facility to a unit of Dublin-based Seagate Technology Plc for $90.3 million, subject to competing offers at a Nov. 14 auction, Carlson testified under questioning from Solyndra lawyer Maxim Litvak. The company incurred about $46 million in costs to achieve those sales, giving it about $71 million in net distributable assets. Lenders who rank ahead of the government, Argonaut Ventures I LLC and Madrone Partners LP, are owed about $77 million, about $6 million short of a full recovery, said Carlson of Imperial Capital.

ABI's Commission to Study the Reform of Chapter 11, whose 22 members constitute a venerable bankruptcy industry Hall of Fame, held a hearing yesterday to gather feedback on what is right and wrong with the statutory scheme that has governed chapter 11 bankruptcy since 1978, Reuters reported. The commission's charge includes "literally considering starting from scratch and re-inventing the statute," said Robert Keach, attorney and commission co-chairman. The commission plans to eventually submit a report to Congress, targeted for April, 2014, that could serve as "part blueprint, part outline" for new legislation, Keach said. The commission will study 13 areas of bankruptcy law, including labor & benefits issues, financing rules and government supervision. It is collecting feedback from several groups through a series of hearings, with upcoming dates at the National Conference of Bankruptcy Judges in San Diego on Oct. 26, and a convention of trade group the Turnaround Management Association in Boston on Nov. 3. Read more:
http://www.reuters.com/article/2012/10/18/bankruptcy-reform-idUSL1E8LHP…

To obtain the prepared witness testimony from yesterday's hearing, view background information on the Commission members or to see upcoming dates of activity, please click here: http://commission.abi.org/

Special-effects company Digital Domain Media Group Inc. is asking bankruptcy court permission to hold an auction for a second set of assets that includes the rights to several upcoming film projects and its Florida animation studio headquarters, Dow Jones DBR Small Cap reported today. Last month Digital Domain sold at auction assets that included its computer-generated effects business and future revenues from movies like "Titanic" and "Enders' Game," a science-fiction movie due out next year.

Dewey & LeBoeuf's former New York landlord has some potentially chilling news for the bankrupt firm's former partners: They may be personally liable for $45 million related to the lease on the firm's midtown Manhattan headquarters—and liability waivers included as a part of a recently approved $71.5 million settlement deal with Dewey's estate will not protect them, American Law Daily reported today. The lease in question dates to 1989, a period during which major law firms were structured as general partnerships, meaning anyone hoping to become an owner of the operation would have to agree to back the firm's debts in exchange for the opportunity to share in the profits. That was the case for Dewey, Ballantine, Bushby, Palmer & Wood—which later shortened its name to Dewey Ballantine and became Dewey & LeBoeuf through its 2007 merger with LeBoeuf, Lamb, Greene & MacRae—when it entered into a 20-year lease with Tishman Speyer Trammell Crow, the then-owner of 1301 Avenue of the Americas. Read more:
http://www.americanlawyer.com/PubArticleALD.jsp?id=1202575180410&slretu…

To learn about unfinished business litigation and other issues surrounding the dissolution of a financially distressed law firm, listen to the latest ABI podcast: http://news.abi.org/podcasts