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A federal judge yesterday rejected PricewaterhouseCoopers' request to dismiss a $1 billion lawsuit accusing the auditor of providing bad accounting advice that contributed to the October 2011 collapse of MF Global Holdings Ltd., a brokerage run by former New Jersey Governor Jon Corzine, Reuters reported yesterday. U.S. District Judge Victor Marrero rejected PwC's argument that the MF Global's bankruptcy plan administrator, which brought the lawsuit, "stands in the shoes" of the company under the “in pari delicto” legal doctrine, and cannot recover because Corzine and other officials were also to blame for the collapse. Judge Marrero has yet to review other PwC arguments for dismissal, including that the administrator had no authority to sue and did not show that the accounting advice was a "proximate" cause of MF Global's bankruptcy.

Puerto Rico’s non-voting representative in the U.S. Congress is exploring changes to federal law that would allow the commonwealth’s municipal agencies to file for bankruptcy to restructure their debts, Bloomberg News reported yesterday. Pedro Pierluisi, whose formal title is resident commissioner, will ask congressional leaders about introducing a bill that would alter the U.S. Bankruptcy Code to let the agencies seek court protection from creditors, just as cities including Detroit and Stockton, Calif., did when they determined they were unable to meet financial obligations. “It would be logical and appropriate for the code to be amended to authorize public agencies and instrumentalities in Puerto Rico to file under chapter 9 to the same degree and extent as their counterparts in the 50 states,” Pierluisi, a Democrat, said yesterday, referring to the section of bankruptcy law that covers municipalities. States and territories are barred from filing for bankruptcy. Puerto Rico lawmakers took matters into their own hands last month, passing a Recovery Act that would allow some public corporations to negotiate with bondholders, potentially forcing them to accept unfavorable terms. The Puerto Rico Electric Power Authority, which supplies most of the island’s electricity and owes $8.6 billion, may be a candidate to reduce its debt load under the new law.

A handful of new lawsuits seek to recover more than $1.5 million for defunct brokerage Peregrine Financial Group Inc.'s creditors from the likes of CNBC, MTV and various charitable organizations, Dow Jones Daily Bankruptcy Review reported today. Ira Bodenstein, the trustee leading Peregrine's bankruptcy liquidation, filed the lawsuits against corporate defendants, a university, several nonprofits and two individuals, court papers show. The lawsuits seek to recover funds the defendants received from Peregrine in the months before the brokerage's July 2012 collapse, which was brought on by the exposure of its founder's fraud.

The liquidating trustee of defunct law firm Dewey & LeBoeuf is arguing his clawback suit against two former firm leaders should not be stayed while they face criminal charges because there is little overlap between the criminal and bankruptcy cases — and because every delay diminishes recovery for creditors, the New York Law Journal reported today. "The trustee's urgency in pursuing these claims is heightened by the real risk that [Joel Sanders and Stephen DiCarmine's] assets will dry up while they scramble to defend themselves against the criminal charges and other potential lawsuits," trustee Alan Jacobs said in papers filed July 4 in Southern District Bankruptcy Court. Jacobs is seeking more than $21.8 million from Sanders, the firm's former CFO, and DiCarmine, former executive director, in Jacobs v. DiCarmine, 13-01765. Jacobs claims that the former executives' employment contracts awarded them exorbitant compensation that required nothing in return.

Nuclear power plant fuel supplier USEC Inc. was cleared Monday to start polling creditors on a chapter 11 bankruptcy plan that would put the U.S. government contractor into the hands of bondholders, the Wall Street Journal reported today. Bankruptcy Judge Christopher Sontchi signed off on voting materials for USEC's restructuring at a court hearing. Once the ballots are in, the company is expected to return to court in September to seek confirmation of the chapter 11 plan. USEC has been negotiating with the U.S. Department of Energy to continue the government support that has sustained it for years, pursuing a loan guarantee, which hasn't been forthcoming. The company is also awaiting action from Congress for continued funding under a contract for the American Centrifuge Project, court papers say. Under a major research and development agreement, the DOE funded 80 percent of the cost of the project, a plant in Ohio that uses advanced U.S. government centrifuge technology to produce nuclear power plant fuel. USEC's role in the project has been cut back, and the cost-sharing replaced by a reduced agreement.

Exide Technologies wants to borrow $65 million more from its bankruptcy lenders, money that could carry the battery maker through its busy fall and winter seasons as it pursues a new restructuring plan, Dow Jones Daily Bankruptcy Review reported today. In a filing made last Thursday with U.S. Bankruptcy Court in Wilmington, Del., Exide said that the senior lenders behind its latest reorganization proposal would provide the $65 million so that the company could build its battery inventory.

A federal judge has limited the ability of the trustee seeking money for victims of Bernard Madoff's Ponzi scheme to recoup sums allegedly transferred fraudulently outside the U.S., Reuters reported yesterday. In a decision on Sunday, U.S. District Judge Jed Rakoff in Manhattan said that Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, cannot invoke U.S. bankruptcy law to recover transfers abroad between foreign entities, including Madoff "feeder funds" and banks. Judge Rakoff cited a presumption that the law did not apply to conduct outside the country, pointing to a 2010 U.S. Supreme Court decision that limited the reach of domestic laws. According to court records, the decision affects several dozen lawsuits that Picard has pursued, against defendants such as Spain's Banco Bilbao Vizcaya Argentaria SA, Bank Austria AG, Bank of America Corp's Merrill Lynch International unit and Royal Bank of Scotland Group Plc. It came six days after the Supreme Court let stand the dismissal of Picard's claims against banks he accused of enabling Madoff's fraud.

Madoff trustee Irving Picard will be providing a keynote titled “Tales from the Madoff Bankruptcy” at ABI’s 34th Annual Midwest Bankruptcy Institute on Oct. 17. For more information or to register, please click here: http://www.abiworld.org/MW14/

The trustee in charge of Jeffrey Soffer's failed Fontainebleau Las Vegas casino project has struck a settlement that would put more than $83 million of directors and officers insurance money into creditors' pockets, Dow Jones Daily Bankruptcy Review reported today. In a filing with U.S. Bankruptcy Court in Miami, lawyers for chapter 7 trustee Soneet R. Kapila said that the settlement also removes $675 million in claims against the Fontainebleau estate.

Six insurance companies are suing an asbestos personal injury trust set up by a U.S. unit of Philips that the insurers suspect has been making millions of dollars in fraudulent payments to parties that cannot prove they were harmed by the company's asbestos products, Reuters reported on Thursday. In the lawsuit, the insurers are seeking access to trust records. The insurers said that the asbestos personal injury or PI trust set up during the 2008 bankruptcy of T H Agriculture & Nutrition LLC, a unit of Philips Electronics North America Corp., had been paying substantially more claims than originally forecast. "Plaintiffs have a reasonable suspicion that fraudulent claims have been submitted to and paid by the asbestos PI trust," said the lawsuit, which was filed on Wednesday in Delaware's Court of Chancery.

Argentina on Friday accused a U.S. judge of being biased in favor of hedge funds that have sued the South American country for full repayment of defaulted bonds, cementing the tough stance it has taken ahead of debt talks set for New York this week, Reuters reported on Friday. A series of rulings by U.S. District Court Judge Thomas Griesa leave Argentina just three weeks to clinch a deal with the funds before falling into another default, which would heap financial stress on its already shrinking economy. The government of President Christina Fernandez denounces the funds as vultures bent on crippling Argentina, Latin America's third largest economy, for the sake of profit. The legal fight stems from Argentina's 2002 default on about $100 billion in bonds. The financial crisis thrust millions of middle-class Argentines into poverty. The economy snapped back from 2003 to 2008 before being weighed down by high inflation and heavy-handed trade and currency controls. More than 92 percent of the country's investors agreed to receive less than 30 cents on the dollar in bond restructurings carried out in 2005 and 2010. A group of funds rebuffed those terms after buying bonds at deep discounts and sued in U.S. federal court demanding 100 cents on the dollar. They won a judgment from Griesa in 2012 for $1.3 billion, and Argentina's appeals have failed.