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The American Bar Association adopted a resolution yesterday supporting the position that bankruptcy judges can, in certain circumstances, adjudicate core proceedings that go beyond a court's constitutional authority, in a response to confusion over the U.S. Supreme Court's landmark Stern v. Marshall decision, Law360 reported today. The ABA resolution says that bankruptcy judges should be allowed to rule on matters in a “core” proceeding even if the matters underlying the proceeding are beyond the court's constitutional authority, provided the parties in the proceeding consent to the bankruptcy court's jurisdiction. “The statute is best construed to authorize a bankruptcy judge to adjudicate…a core proceeding requiring the judicial power of the United States in the same manner as the judge already may adjudicate a noncore proceeding—upon the express consent of the parties,” the proposal said. The proposal addresses statutory confusion in light of the 2011 Stern ruling, which found that a non-Article III bankruptcy judge lacked constitutional authority to enter final judgment on a debtor's common law counterclaim against a creditor, even though the court had authority to rule on the core proceeding under the federal judicial code.

Hostess Brands Inc. won bankruptcy court approval to hold auctions for brands including Wonder Bread, Twinkies and Drake's, Bloomberg News reported yesterday. Bankruptcy Judge Robert Drain yesterday approved Flowers Foods Inc., McKee Foods Corp., United States Bakery Inc., Apollo Global Management LLC and C. Dean Metropoulos & Co. as stalking-horse bidders for most of Hostess' cake and bread brands, setting the thresholds other suitors will have to exceed. A sale hearing, to approve the highest and best bids, is set for March 19.

Bahrain-based Arcapita Bank, the first Gulf company to file for bankruptcy in the U.S. under chapter 11, said on Saturday that it had submitted a plan to reorganize the company, Reuters reported yesterday. The investment firm filed for bankruptcy in New York in March and was given court approval in November to take out a $125 million loan to provide funding while it restructured its debts. Arcapita's case is being closely watched in the Gulf, where companies have little recourse to dealing with insolvency in an orderly fashion. However, analysts have said few other bankrupt Gulf companies are likely to follow Arcapita in seeking chapter 11 protection because they would need to prove strong business links to the United States.

Hostess Brands Inc. today will seek bankruptcy court approval to put many of its brands on the auction block in coming weeks, including Twinkies and Ho Hos, Dow Jones Newswires reported on Friday. A bankruptcy court is set to consider three auction proposals from the liquidating baker, all of which have stalking-horse bids lined up to lead off the bidding at auctions Hostess wants to hold in March. Private-equity firms Apollo Global Management LLC and Metropoulos & Co. have teamed up to bid $410 million for most of Hostess's cakes business, including the Twinkie, Dolly Madison, Ho Hos and Ding Dongs brands. The bid also covers five bakeries and certain equipment. Hostess wants to pay the private-equity firms a $12.3 million breakup fee if they lose at the March 13 auction. The company is further proposing a March 19 sale hearing for the court to approve the winning bid. Also up for consideration before the court today are separate auction proposals for Hostess's Drake's brand and several bread brands, including Grandma Emilie's and Sweetheart.

United Refining Energy Corp. has won a bankruptcy auction for the assets of Metro Fuel Oil Corp. with a $27 million bid, Dow Jones DBR Small Cap reported today. According to papers filed on Wednesday, United Refining emerged as the winner of a two-day auction held Monday and Tuesday for the assets with its $27 million cash offer and commitment to hire at least 75 percent of Metro Fuel's workers. Castle Oil Corp. has been designated the backup bidder with a $20 million cash offer.

Attorneys for Pitman Family Farms filed court papers on Tuesday in which they claimed that bankrupt Zacky Farms has sped up the sale and delivery of more than $1 million worth of whole turkey inventory to Stater Bros. Markets, a private grocery retailer based in Southern California, Reuters reported yesterday. The sale of the inventory originally had been scheduled from Jan. 30 through March 8. Instead, according to Pitman's attorneys, "Zacky revised the delivery schedules to deliver five or six loads a day" so all of the meat would be delivered to the retailer weeks before the bankruptcy court's expected approval of the sale of Zacky Farms. The agreement to buy Zacky Farms out of chapter 11 was based on Pitman having access to that inventory of frozen birds "to help offset losses that will be incurred after the approved sale," according to the court papers.

While the Twinkie's demise nearly came about at the hands of corporate America's machinations, its survival depended on a bankruptcy liquidation that made the 83-year-old brand salvageable, according to a New York Times DealBook analysis yesterday. Its first owner, Continental Baking Company, bought companies left and right in the 1920s, including the Taggart Baking Company, maker of Wonder bread, in 1925. Continental Baking continued its acquisition spree and by 1968 it was a motley assortment of baking brands that fed on America's tastes for sweet and easy food. It was then acquired by Harold Geneen's ITT, a conglomerate that sold not only Twinkies but also munitions. There, the brand sat for 16 years until Continental Baking was sold in 1984 for $475 million to Ralston Purina. By then the baking business had entered a slow growth phase as inflation in baked goods, which had allowed the company continually to raise prices, subsided. Ralston Purina was unable to produce growth in the brands and ended up selling the bakery for about $400 million in 1995 to Interstate Bakeries. Interstate Bakeries was itself a mongrel of many brands put together by serial acquisitions. The company entered bankruptcy in 2004. More than four years later, it emerged, now owned by Ripplewood, which put up $130 million to acquire it. It was then that the company rebranded itself as Hostess Brands. Despite the company's cost cuts, and its reductions in employee headcount by about 10,000, that was still not enough to stave off bankruptcy. Hostess in 2012 filed a plan to liquidate the company and fire almost all its 18,000 employees. Instead of trying to work out a compromise by reorganizing in bankruptcy, the company used the bankruptcy process to escape all its past burdensome debts.

The dominance of Delaware and New York bankruptcy courts is secure for another two years, for reasons Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle explain on their new video. Click here to watch the video.

The bankruptcy case of Ponzi schemer Scott Rothstein's law firm could be at its end if the trustee for now-defunct Rothstein Rosenfeldt Adler wins what is shaping up to be one of the biggest courtroom battles yet in the case, the South Florida Sun-Sentinel reported yesterday. Trustee Herbert Stettin submitted a liquidation plan on Tuesday to Bankruptcy Judge Raymond B. Ray that includes a proposed settlement calling for TD Bank to pay up to $72.4 million to cover investors' losses. TD Bank would admit no wrongdoing in its dealings with Rothstein and the settlement would block individual investors' lawsuits against the bank from going forward. Attorneys for some investors vowed to contest the settlement with TD Bank, which has been accused of allowing Rothstein's Ponzi scheme to flourish and covering up his lies. Pending lawsuits from investors are seeking more than $1 billion in compensatory and punitive damages against the bank.

Satcon Technology Corp. has given up hope of finding a buyer for its bankrupt business, which converts renewable energy for the electrical grid, and instead plans to conduct a liquidation, Reuters reported yesterday. Since it filed for bankruptcy in October, Satcon has been talking with potential bidders while at the same time negotiating with its lenders for continued breathing room. Boston-based Satcon did not receive any bids by Friday's deadline that satisfied the company's lender, Silicon Valley Bank, which refused to provide financing beyond Feb. 6, according to court documents. As a result, the company's board voted on Monday to convert its bankruptcy to a chapter 7 liquidation.