A bankruptcy judge said he won't reconsider a ruling that slashed Garlock Sealing Technologies' asbestos liability to $125 million from $1.3 billion, but plaintiffs' lawyers plan to appeal the decision, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge J. Craig Whitley denied on Tuesday the request by the official committee of asbestos personal injury claimants, which had asked the judge to consider new evidence that it said could change Garlock's liability to asbestos claimants.
The top executive charged in a chemical spill that left 300,000 people without drinking water lied about his role with the company to protect his personal wealth of nearly $8 million from lawsuits, according to an FBI affidavit, the Associated Press reported yesterday. In bankruptcy court hearings and meetings, former Freedom Industries President Gary Southern repeatedly said that he had little to do with the company before it was sold a few weeks prior to the January chemical spill. But an FBI affidavit said that Southern had overseen day-to-day operations at the chemical storage company, hired employees and executed contracts for several years, according to a complaint unsealed on Monday. Southern negotiated the sale of Freedom Industries to Chemstream Holdings Inc. just weeks before the spill, and discussed how much money would be set aside to deal with necessary repairs at the site, the complaint said. Investigators discovered holes in tanks, shoddy last-resort containment walls and other deficiencies. Southern, who has previously denied wrongdoing, faces charges of bankruptcy fraud, wire fraud and lying under oath. If convicted of all the charges, he faces up to 30 years in prison.
Shuttered Revel Casino Hotel filed an emergency motion yesterday, seeking approval to terminate its deal with Brookfield Property Partners LP and schedule a hearing to approve the sale to backup bidder Polo North Country Club Inc., Reuters reported today. Brookfield won the auction for Atlantic City, New Jersey's bankrupt Revel with a $110 million bid in October, outbidding Polo North Country Club. Florida developer Glenn Straub, who owns Polo, had at that time told Reuters he was prepared to bid up to at least $134 million. Last month, Brookfield Property made a surprise announcement that it was walking away from its October agreement for the 1,400-room hotel complex, blaming a disagreement over a utility contract for the faltering deal. It did not provide an official notice terminating the deal at that time, leaving some hope the sale could be rescued.
The remnants of First Mariner Bancorp won bankruptcy court approval of a liquidation plan that promises to pay investors in bank-holding company's debt about 21 cents on the dollar, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge David E. Rice yesterday signed off on the liquidation plan for Capital Trust Holdings, the name for what's left of the company following the sale of its stake in the 1st Mariner bank chain. The debt investors had purchased about $63 million in trust-preferred securities from First Mariner.
Attorney General Eric Holder appointed Andrew R. Vara as Acting U.S. Trustee for Region 3 (Delaware, New Jersey and Pennsylvania) and Daniel J. Casamatta as the Acting U.S. Trustee for Region 13 (Arkansas, Missouri and Nebraska), both effective on Jan. 1, the Executive Office for U.S. Trustees announced yesterday. Vara replaces Roberta A. DeAngelis, who is retiring after more than 15 years with the U.S. Trustee Program (USTP), including more than eight years as Region 3 U.S. Trustee or Acting U.S. Trustee. Vara has served as the Assistant U.S. Trustee in the USTP’s Cleveland office since 2008. He also previously has headed the USTP’s offices in Wilmington, Del., and Manhattan, as Assistant U.S. Trustee and Acting Assistant U.S. Trustee, respectively. For more on Vara’s appointment: http://www.justice.gov/ust/eo/public_affairs/press/docs/2014/pr20141208…
Casamatta replaces Nancy J. Gargula, the U.S. Trustee for Region 10 (Indiana and Central and Southern Illinois), who concurrently has served as the U.S. Trustee for Region 13 since 2006. Casamatta has served as the Assistant U.S. Trustee in the Kansas City, Mo., office of the USTP since 2008. Prior to that appointment, he served as Assistant U.S. Trustee in Grand Rapids, Mich., for 18 years, and for periods of time was also the Acting Assistant U.S. Trustee in Indianapolis and the Acting Chief of the USTP’s National Bankruptcy Training Institute located in the National Advocacy Center in Columbia, S.C. For more on Casamatta’s appointment: http://www.justice.gov/ust/eo/public_affairs/press/docs/2014/pr20141208…
ABI’s Commission to Study the Reform of Chapter 11 unveiled hundreds of ideas yesterday for a “substantial modernization” of Chapter 11 of the U.S. Bankruptcy Code, Bloomberg News reported today. The Commission’s report followed more than two years’ research into ways to fix distressed companies, the group said in a fact sheet. They include making it easier to obtain financing during bankruptcy and creating an alternative path for small and medium-sized businesses to reorganize. The group suggests its proposal can accelerate companies’ exit from bankruptcy under chapter 11, which covers reorganizations, by adding a rule to avoid drawn-out and often expensive valuation fights between senior- and junior-ranking creditors. Lower-ranking creditors could get a chance at recovery if, after exiting chapter 11, the reorganized company’s value increases to a point where they “might have been in the money or received a greater recovery if the firm had been valued at a later date,” according to the Commission’s report. http://www.businessweek.com/news/2014-12-08/bankruptcy-group-offers-con…
Victims of Bernard Madoff's Ponzi scheme may recover less money than they had hoped after a federal appeals court limited the ability of the trustee liquidating the swindler's firm to recoup "fictitious profits" and other payments from customers, Reuters reported yesterday. The U.S. Court of Appeals for the Second Circuit yesterday said that federal bankruptcy law did not let the trustee Irving Picard recoup a variety of payments that Bernard L. Madoff Investment Securities LLC made to some customers more than two years before the firm collapsed on Dec. 11, 2008. Picard has been seeking to recoup money from customers who withdrew more from their accounts than they invested. Circuit Judge Barrington Parker, however, said that allowing the sought-after "clawbacks" risked the kind of "significant market disruption" that Congress intended to avoid by adopting protections for brokerage customers in the Bankruptcy Code. https://en-maktoob.news.yahoo.com/madoff-trustee-loses-appeal-clawbacks…
In related news, one of Bernard Madoff’s longest-serving employees was sentenced to 10 years behind bars for helping run a $17.5 billion fraud, Bloomberg News reported yesterday. Daniel Bonventre ran Madoff’s broker-dealer unit for almost 40 years after being hired in the 1960s. He’s the first of five former Madoff aides to be sentenced, following their conviction in March. The other four are scheduled to learn their fate in the coming days.
RadioShack is confused by the mixed signals of a lender who flip-flopped to push the troubled retailer into bankruptcy, the New York Times reported today. Salus Capital — who joined Cerberus Capital Management — now claims RadioShack is in default, though the money-losing retailer yesterday made a public presentation explaining why it was not. Its contention was that it did not borrow money in October from an affiliate, which it is prevented from doing. RadioShack says that since lender Standard General owns less than 10 percent of its voting stock, it does not qualify as such. RadioShack term lenders Cerberus and now Salus on Dec. 2 claimed the company had defaulted, since Standard General qualifies as an affiliate because it owned a greater-than-10-percent company stake. If RadioShack cannot reach a deal with the two lenders, it may need to file for bankruptcy next month.
Former customers of Peregrine Financial Group Inc., the brokerage firm that collapsed after the exposure of its founder's fraud, are in line to recover more of the $394 million they are owed, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy trustee Ira Bodenstein wants to distribute up to $34 million to Peregrine's commodities futures customers based in the U.S. and abroad, the third such distribution since the Iowa brokerage's 2012 collapse. Bodenstein, who is in charge of picking up the pieces for a brokerage firm that fell apart once founder Russell Wasendorf Sr. was found to have stolen millions of dollars in customer funds, has to date returned about $159 million to the futures customers.
Bankruptcy Judge Mary F. Walrath has approved a $106 million debtor-in-financing package that allows Durham, N.C.-based Reichhold Inc. to continue its resin and coatings plant operations in Durham, the Triangle Business Journal reported yesterday. The judge, however, also granted permission to sell many of the chemical company's assets through a sale scheduled for Jan. 6. Reichhold Holdings US Inc., the U.S.-based branch of the Reichhold Group, filed for chapter 11 protection in September. Reichhold affiliates outside of the U.S. are not included in the bankruptcy petitions. The petition, filed with the U.S. Bankruptcy Court for the District of Delaware, listed more than $500 million in debt that the company owed and less than $500 million in assets.
