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RDA Holding Co., publisher of the 91-year-old Reader’s Digest magazine, filed for bankruptcy to cut $465 million in debt and focus on North American operations as consumers shift from print to electronic media, Bloomberg News reported today. Reader’s Digest, founded by DeWitt and Lila Wallace, went public in 1990. An investor group led by private-equity firm Ripplewood Holdings LLC bought it in 2007 for $1.6 billion and the assumption of about $800 million in debt. The company also filed for bankruptcy in August 2009, citing a drop in advertising spending and the debt load incurred in its acquisition. The company listed assets and debt of more than $1 billion each in chapter 11 documents filed yesterday. Under a restructuring agreement supported by Wells Fargo & Co., $465 million of remaining senior notes will all convert to equity. The company expects to have about $100 million in debt when it exits chapter 11, about an 80 percent reduction.

The U.S. Trustee Program reached settlements with Capstone Advisory Group LLC and Kaye Scholer LLP in the bankruptcy case of GSC Group, Inc., according to USTP press releases last week. Both settlements are to resolve that both firms failed to make accurate and complete disclosures in the GSC Group bankruptcy. Under the proposed Capstone settlement, the financial adviser will pay $1 million, waive an additional success fee of $2.75 million, adopt policies and procedures approved by an independent monitor to ensure accurate and complete disclosure, including with respect to employment of contractors and conflicts of interest and undergo compliance reviews by the monitor for two years. The proposed Kaye Scholer LLP settlement will have the law firm paying $1.5 million, adopt policies and procedures approved by an independent expert to ensure the accuracy and completeness of disclosure, including checks for conflicts of interest and assurance that attorneys review documents filed in their name, establish a special compliance review committee to certify under penalty of perjury the law firm’s continuing compliance and provide training to its attorneys and other staff to ensure the accuracy and completeness of documents it files in bankruptcy court. The case is In re GSC Group Inc., U.S. Bankruptcy Court, Southern District of New York, No. 10-14653.

A bankruptcy judge has cleared California stereo-equipment maker AuraSound Inc. to auction its assets, with GGEC America Inc., a subsidiary of the company's biggest creditor and main primary supplier, kicking off bidding with a $4.8 million offer, Dow Jones DBR Small Cap reported today. Bankruptcy Judge Mark S. Wallace on Wednesday said that AuraSound can auction the assets, including the exclusive, royalty-free license to use AuraSound’s trademarks and all of the assets related to the operation of AuraSound’s Hitachi, Vizio and NRT lines of business, on March 1.

Bankruptcy Judge Shelley C. Chapman said that LightSquared can keep control over its chapter 11 case until at least the summer after the wireless satellite company struck a deal with lenders to involve them more closely in the reorganization process, Dow Jones Newswires reported yesterday. The extension gives LightSquared until May 31 to file reorganization plan and July 15 to solicit votes on such a plan without the threat of rival proposals. The deal, filed with the bankruptcy court on Wednesday, calls for LightSquared to only propose a reorganization plan that the lender group supports or that pays the group in full, in cash, along with other creditors. The lender group, owed about $1.1 billion, can file its own plan if LightSquared does not consult with it or if the company breaches the terms of an agreement that allows it to use cash secured by the lenders' loans.

Irving S. Picard, the trustee for Bernard L. Madoff Investment Securities Inc., said that he will make an additional distribution of $505 million to customers, bringing the total to more than $5.4 billion, or almost 43 percent of approved claims, Bloomberg News reported yesterday. The distribution, announced yesterday, will be the third by Picard. Including $806 million provided by the Securities Investor Protection Corp., Picard previously distributed just under $5 billion to customers. The bankruptcy court in New York will hold a hearing on March 13 to approve the new distribution to victims of Madoff’s $20 billion Ponzi scheme, the largest in U.S. history.

Less than a week after a group of retired Dewey & LeBoeuf partners appeared to pave the way for the swift approval of the defunct firm's proposed chapter 11 liquidation plan by settling a dispute with the Dewey estate, fresh resistance to a key component of that plan has emerged in the form of objections raised by six former Dewey partners, the Am Law Daily reported today. In a series of filings made ahead of a deadline yesterday, the former partners in question—two individuals and a pair of two-person teams—argue that Bankruptcy Judge Martin Glenn should not approve the chapter 11 plan, which serves as a blueprint for how the Dewey estate expects to dispose of its assets in order to pay off creditors who say they are owed a combined total of some $600 million. Many of the objections raised in the filings focus on the partner contribution plan, which is in many ways the linchpin of the larger liquidation plan and offers those who have agreed to pay the estate a portion of their 2011 and 2012 Dewey earnings a waiver from future liability related to the firm. A majority of Dewey's former partners have signed on to the deal, which, according to court filings, is expected to raise at least $70 million in amounts ranging from $5,000 to $3.37 million.

When U.S. District Jed Rakoff recanted a ruling he made previously in the liquidation of Bernard L. Madoff Investment Securities Inc., the reversal was important because it allows the Madoff trustee to knock out billions of dollars in claims, as Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss on their new video. Click here to view the video.

A judge has confirmed the reorganization plan for the oldest junior college in Texas, the Associated Press reported yesterday. Lon Morris College, a two-year Methodist college in the East Texas town of Jacksonville, filed for bankruptcy and suspended classes last year. The campus was sold at auction last month, with most of the property bought by a local school district and an office supply company. An interim payment had previously been negotiated for employees who had not been paid for their final weeks of work. Last week the college announced agreements with several Methodist foundations that are expected to result in the former employees receiving all of their back wages.

Lehman Brothers Holdings Inc. has agreed to sell 237 Park Avenue, a 21-story Midtown Manhattan office building, to RXR Realty and Walton Street Capital LLC, Reuters reported yesterday. The purchase price is $820 million and the pending sale comes just months after Lehman agreed to sell its biggest property holding, apartment owner Archstone, to AvalonBay Communities Inc. and Equity Residential for $6.5 billion plus the assumption of debt. Lehman, which collapsed in 2008, emerged from bankruptcy in March 2012 and is selling assets to repay creditors.

Residential Capital LLC asked a bankruptcy judge to approve the appointment of a chief restructuring officer to help it reach and confirm a reorganization plan following its assets sale, Bloomberg News reported today. ResCap is looking to appoint Lewis Kruger, a partner and co-chairman of the financial restructuring group at Stroock & Stroock & Lavan LLP who has worked as a restructuring attorney for more than 40 years. New York-based ResCap filed for bankruptcy in May with plans to sell its major assets and resolve legal claims related to mortgage loans. The company is owned by Ally Financial Inc., a Detroit-based lender majority owned by U.S. taxpayers.