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The Delaware Supreme Court said on Friday that creditors are entitled to rely on formal loan documents authorized by secured lenders, even if there is a mistake in the documents, Reuters reported on Saturday. The court was responding to a question from a New York federal appeals court relating to a dispute between creditors of General Motors before its 2009 bankruptcy and its former lender, JPMorgan Chase & Co. The issue relates to GM's insolvency, in which its healthy assets were sold to the new General Motors Co, while the rest were liquidated for the benefit of unsecured creditors. GM's unsecured creditors' committee claimed that JPMorgan and other holders of a syndicated $1.5 billion term loan extinguished their lien on GM's assets, freeing up the assets to unsecured creditors. JPMorgan said neither it nor GM intended to nix the lien. "Parties in commerce are entitled to rely upon a filing authorized by a secured lender and assume that the secured lender intends the plain consequences of its filing," the court said in its opinion.

Farmers in Oklahoma and Texas who shipped more than $20 million worth of guar beans last year to the nation's only guar processing plant, which is now in bankruptcy, have struck a deal with the plant's majority owner, a New York hedge fund, Dow Jones Daily Bankruptcy Review reported today. Under the deal, the farmers who agree to the plant's pending sale to an investment firm will recover about 75 cents on the dollar of what they're owed when the plant near Lubbock, Texas, leaves bankruptcy protection. Some farmers will also be able to split another $2.95 million.

The bankrupt Trump Taj Mahal casino received court approval on Friday to break its labor agreement, a key condition for a rescue deal with billionaire Carl Icahn, and the union promptly announced a plan to picket the Atlantic City, N.J., hotel, Reuters reported yesterday. Parent company Trump Entertainment Resorts Inc. has said that trimming $14.6 million from its annual union pension and health care costs is key to saving the casino from becoming the fifth to close this year in the seaside resort. Bankruptcy Judge Kevin Gross said during a hearing that he would approve the request and would explain his reasoning in a written opinion this week. The Unite Here Local 54 union will appeal the ruling, the union's lawyer, Kathy Krieger of the law firm James & Hoffman, told the court.

The trustee handling the 38 Studios’ bankruptcy case in Delaware is making his latest bid to recover money from the people and companies that did business with the failed Providence, R.I.-based video-game company, the Providence Journal reported today.
The complaint filed on Oct. 3 in the U.S. Bankruptcy Court for the District of Delaware by trustee Jeoffrey Burtch said that lawyer Michael Corso should not have been paid $232,800 shortly before the company collapsed because 38 Studios “was insolvent on the date that such transfer was made.” The payment was just some of the money paid out to vendors in the waning days of the company’s existence. 38 Studios filed for federal bankruptcy in June 2012, just months after it released its first video game. The company never completed the more-complicated game, which underpinned a $75 million loan guarantee that the R.I. Economic Development Corp. gave it to move to Providence.

The team winding down Lehman Brothers Holdings Inc. is accusing some of the nation's financial institutions of trying to freeze billions of dollars of Lehman cash earmarked for other creditors to "coerce" a favorable settlement in their fight with the failed investment bank over soured mortgage loans, Dow Jones Daily Bankruptcy Review reported today. In a bankruptcy court filing on Wednesday, lawyers for Lehman blasted the trustees responsible for some 255 individual residential mortgage-backed securities trusts that purchased mortgage loans from Lehman before the financial crisis. The trusts have said that Lehman needs to set aside $12.14 billion to settle claims over certain soured mortgage loans, more than double the amount that the failed investment bank has put aside for the dispute.

After a historic settlement in clergy sex abuse lawsuits in Minnesota, the Archdiocese of St. Paul and Minneapolis, along with the Diocese of Winona, said that they were considering all options to pay for the settlement, including bankruptcy, WCCO.com reported yesterday. Experts say that if their insurance doesn’t step up to cover the payment of this settlement, it could be very likely they will file for bankruptcy. “You always have that trigger question, ‘Will the insurance cover everything that is being sought?'” said Charles Reid, a professor of law at the University of St. Thomas. Over the past decade, 11 dioceses across the country have filed for bankruptcy due to lawsuits.

The judge overseeing the mysterious bankruptcy of an Apple Inc. sapphire supplier yesterday voiced skepticism over the widespread sealing of documents in the case, saying that he is "not seeing the kind of trade secrets" that would warrant sealing, Reuters reported yesterday. Scant information has emerged since GT Advanced Technologies Inc. filed for bankruptcy last week, wiping out most of its market value and triggering speculation as to what may have soured its Apple relationship and torpedoed its prospects. Key court filings revealing the reasons for the bankruptcy, which are routine in most chapter 11 cases, have in this case been filed with the court in secret. GT Advanced cited strict confidentiality requirements in its Apple contracts which, if violated, carry fines of $50 million.
http://finance.yahoo.com/news/u-judge-gt-advanced-bankruptcy-200611692…

In related news, New Hampshire and the U.S. Justice Department want to know why GT Advanced Technologies Inc. filed for bankruptcy just 10 months after announcing a multiyear supply agreement with Apple Inc., Bloomberg News reported yesterday. GT Advanced, based in Merrimack, N.H., should be ordered to file a public account of what led to the bankruptcy, including key transactions with Apple, according to both the U.S. Trustee supervising the company’s bankruptcy and the state of New Hampshire. “Public scrutiny of a debtor’s conduct and transparency in the bankruptcy process is essential to fostering confidence among creditors and parties in interest regarding the fundamental fairness of the bankruptcy system,” the U.S. Trustee wrote in court papers yesterday, urging a judge to order disclosure.
http://www.bloomberg.com/news/print/2014-10-14/gt-advanced-must-disclos…

U.S. Steel Canada said yesterday that it has reached a tentative deal with union leaders on a contract for workers at its Hamilton Works operations in Ontario, Reuters reported yesterday. U.S. Steel Canada, a wholly owned subsidiary of parent U.S. Steel Corp, was recently granted creditor protection by the Ontario Superior Court as it attempts to restructure its operations. The terms of the tentative agreement were not disclosed and the deal remains subject to ratification by members of United Steelworkers Local 1005.

Energy Future Holdings Corp. is trying to establish a bidding and sale process that locks in the structure of a reorganization plan and produces “catastrophic” results for the unregulated power plants, creditors of the generation side of the company said in court filings at the end of last week, Bloomberg News reported yesterday. The objections come from senior noteholders of the generation business and the official creditors’ committee representing that side of the company. The bankruptcy judge in Delaware will lay down auction rules at an Oct. 17 hearing. Two factions epitomize the divergent views about how the bankruptcy reorganization, which began in April, should proceed. The holding company and creditors of the Oncor electric distribution business want a structure that avoids what they say would be a potential $7 billion tax liability. Avoiding taxes resulting from a sale requires a tax-free spinoff of the generation business, but creditors of the generation business say that the tax-free structure would deprive them of a stepped up basis in the assets that they would receive. In turn, the lack of a higher basis would mean the loss of billions of dollars of potential value in the generation business.

Roger Dean Gillispie, a former General Motors security guard, spent 20 years in an Ohio prison for rape until a federal court ordered him released in 2011. Now he wants to sue GM for allegedly helping to frame him, and he’s getting support from an unlikely source: hedge funds, according to a Reuters analysis yesterday. Gillispie, who is waiting to see if he will face a new criminal trial, has petitioned the U.S. Bankruptcy Court in New York for permission to sue GM. The court, which is overseeing claims against the company in the wake of its 2009 chapter 11 reorganization, must decide if Gillispie can seek damages from so-called New GM, the profitable company that emerged from bankruptcy, or must go after Old GM, which is a trust composed of limited assets to settle past claims against the carmaker. He is making essentially the same argument as owners of older cars recalled in GM's ignition-switch debacle this year, who have filed more than 100 lawsuits seeking class action status and want permission from the bankruptcy court to pursue deep-pocketed New GM. Under the 2009 bankruptcy agreement, New GM is largely shielded from liabilities arising before it was created. Gillispie and the car owners argue they could not have known about key facts central to their cases before the GM bankruptcy and should be able to sue the new company. Hedge funds with claims on the Old GM assets also prefer new claimants direct their claims toward New GM.