A federal judge has accepted a compromise between bankrupt Great Northern Paper and its creditors that sets aside a portion of the expected receipts from the sale of the East Millinocket, Maine-based mill for dozens of unsecured creditors, the Portland Press Herald reported on Saturday. In a ruling filed on Friday at U.S. District Court, Judge Louis H. Kornreich approved a proposal to remove liens from Great Northern Paper’s assets so a sale of the defunct paper mill can go ahead. A “carve out” from the proceeds of the sale will provide funds to the company’s unsecured creditors, including many businesses in the Katahdin region that were never paid for goods and services. Collectively, they are owed $22.6 million.
Six years after Bernard Madoff’s fraud collapsed, the cost of liquidating his defunct investment advisory firm to repay thousands of victims has topped $1 billion, though the con man’s former customers aren’t footing the bill, according to a Bloomberg News analysis on Friday. The fees, paid by the industry-backed Securities Investor Protection Corp. (SIPC), which is managing the case, have financed a team of lawyers who this week surpassed $10 billion in recoveries for victims, or almost 60 percent of the principal that vanished after Madoff’s arrest in December 2008. Irving Picard, the bankruptcy lawyer who’s leading the effort as trustee for Madoff’s company, included the new fee total in an interim report posted yesterday on his website. A bankruptcy judge in Manhattan regularly approves the fees, sometimes over the objections of victims’ groups. The victims, who lost $17.5 billion in principal, have been paid back almost $6 billion by Picard since he started distributing the recovered funds. Billions more are being held in reserve until lawsuits by victims seeking larger payouts are resolved. The last distribution, about $349 million, was in May.
Earlier this year Maryland’s Community Law Center had its first victory under an updated law meant to stop bad behavior by the owners of blighted properties that refuse to clean them up, but late Tuesday night the progress in that effort was halted as the landlord filed for bankruptcy, the Wall Street Journal reported on Saturday. Last year, using Maryland’s revised community bill of rights law, a number of community associations and the Community Law Center sued Scott Wizig — a landlord who was sued by Eliot Spitzer in New York in the early 2000s and is the subject of a recent investigative report by the Houston Press — and nine LLCs that owned 57 nuisance properties in Baltimore. These properties were uninhabitable, vacant houses that were attracting crime and trash, allegedly posing a health and safety hazard and harming the community. The lawsuit alleged that Wizig was breaking the law at approximately 140 of his Baltimore properties. The bankruptcy filings on tuesday allowed Wizig — who, despite the court’s order, hasn’t brought the properties to code, according to Robin Jacobs of the Community Law Center — to freeze litigation. A request to pull the litigation into the bankruptcy case, rather than allow it to proceed in state court, has already been filed alongside the bankruptcy petitions.
Columbus (Ohio) Blue Jackets player Jack Johnson has earned more than $18 million during his nine-year NHL career, not including the $5 million he will be paid this season by the Blue Jackets, but he filed for bankruptcy after being crushed by debt, the Columbus Dispatch reported yesterday. Almost all of the money is gone, and some of his future earnings have already been promised — which is why Johnson, surrounded by a new team of financial advisers and an attorney, signed his financial surrender. The scene was nearly four years in the making, after a string of risky loans at high interest rates; defaults on those loans, resulting in huge fees and even higher interest rates; and three lawsuits against Johnson, two of which have been settled and one that’s pending. In 2008, Johnson parted ways with agent Pat Brisson, who represents some of the National Hockey League’s biggest stars, including Sidney Crosby, Patrick Kane and Jonathan Toews. With no agent and little knowledge of how the financial world works, Johnson turned over control of his money to his parents. In 2011, in the weeks leading up to Johnson’s first big contract — a seven-year, $30.5 million deal signed with the Los Angeles Kings, under which he now plays for the Blue Jackets — Johnson signed a power of attorney that granted his mother full control of his finances. Tina Johnson borrowed at least $15 million in her son’s name against his future earnings, taking out a series of high-interest loans — perhaps as many as 18 — from nonconventional lenders that resulted in a series of defaults.
The Archdiocese of St. Paul and Minneapolis (Minn.) reported a $9.1 million operating deficit for fiscal year 2014 and reiterated Thursday that it's considering filing for bankruptcy because of the potential for more lawsuits by victims of clergy sexual abuse, the St. Paul Pioneer Press reported today. The archdiocese released its financial information in its newspaper, the Catholic Spirit, more than a week after it said it was cutting its central office budget by 20 percent, including 11 jobs. The archdiocese said its operating deficit can be partly attributed to $4.1 million spent to address allegations of clergy sexual abuse since May 2013, when a three-year window opened for abuse victims to file claims that were otherwise barred under the statute of limitations. The archdiocese's chief financial officer, Thomas Mertens, said that outside professionals were brought in and that most expenses were related to a review of priest files, investigation of insurance coverage and analysis of financial options. Nienstedt said that since the statute of limitations was lifted, the archdiocese has settled two cases and 20 trials are scheduled. Victims of past abuse still have about 18 months to pursue litigation.
Television streaming service Aereo Inc. filed for bankruptcy protection after a U.S. Supreme Court ruled in June that the company's business model violated copyright laws, Reuters reported today. InterActiveCorp has a 23.30 percent stake, said in a chapter 11 filing yesterday said that it would sell its assets or reorganize. The Court in June said that Aereo had infringed copyrights of broadcasters by capturing live and recorded programs through antennas and transmitting them to subscribers for $8-$12 a month. Aereo, which raised $95.6 million in financing, suspended its streaming service at the end of June and cut jobs. The company listed total assets of $20.5 million and debt of about $4.2 million in its filing. The filing is In re Aereo Inc., U.S. Bankruptcy Court, Southern District of New York, No:14-13200.
A showdown between the Atlantic City, N.J.'s shuttered Revel Casino Hotel and the bondholders behind its custom-built power plant is threatening to unravel a $110 million deal to sell the boardwalk resort to a Canadian private-equity firm, Dow Jones Daily Bankruptcy Review reported today. According to a spokesperson for Brookfield Capital Partners LP, which earlier this year won a bankruptcy auction to buy the property for $110 million, the firm has informed Revel that it plans to pull out of the deal over payments related to the property's custom-built power plant. The power plant, operated by ACR Energy Partners LLC, is located next to the resort and is Revel's only source of both electricity as well as hot water, court papers show.
Six years after Bernard Madoff’s fraud collapsed, the cost of liquidating his defunct investment advisory firm to repay thousands of victims has topped $1 billion, though the con man’s former customers aren’t footing the bill, Bloomberg News reported today. The fees, paid by the industry-backed Securities Investor Protection Corp., which is managing the case, have financed a team of lawyers who this week surpassed $10 billion in recoveries for victims, or almost 60 percent of the principal that vanished after Madoff’s arrest in December 2008. Irving Picard, the bankruptcy lawyer who’s leading the effort as trustee for Madoff’s company, included the new fee total in an interim report posted yesterday on his website. A bankruptcy judge in Manhattan regularly approves the fees, sometimes over the objections of victims’ groups. The victims, who believed their investments were used to buy securities, have been paid almost $6 billion by Picard since he started distributing the recovered funds. The last distribution, about $349 million, was in May.
Starting Dec. 1, bankruptcy courts will charge $25 to file a motion seeking to redact information from previously filed papers, the Wall Street Journal reported today. One other new fee will also take effect next month, according to the Administrative Office of the U.S. Courts. The existing $157 fee to appeal a bankruptcy court ruling directly to a U.S. Court of Appeals, bypassing the district court, will increase by $50 to $207. For more information, please click here: http://news.uscourts.gov/new-court-fees-take-effect-dec-1
Hutcheson Medical Center’s board of directors voted Wednesday night to file for chapter 11 protection, the Chattanooga Times Free Press reported today. Hutcheson has been unable to repay $20 million it borrowed from Erlanger Health System and is facing a threat of foreclosure. In January, Erlanger filed a civil lawsuit against Hutcheson, who was supposed to pay back the $20.5 million loan by Dec. 1 of last year.
