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Lawyers for James Merrill, the president and co-owner of TelexFree who is under house arrest awaiting trial on fraud charges, are requesting the release of more than $4 million from frozen bank accounts to fund his legal defense, Dow Jones Daily Bankruptcy Review reported today. Merrill and his partner, who authorities say fled to Brazil, stand accused of running a massive pyramid scheme and face criminal wire-fraud charges in Massachusetts, where their now-bankrupt company is based. In papers filed Tuesday with the U.S. District Court in Worcester, Mass., defense attorneys said that based on the magnitude of the alleged crime, the release of about $4.2 million held in four bank accounts is essential to Merrill's ability to fully defend himself.

Quiznos said yesterday that it has emerged from bankruptcy after restructuring its finances, the Associated Press reported yesterday. The toasted sandwich chain filed for chapter 11 protection in March and reduced its debt by more than $400 million. CEO Stuart Mathis said that it plans to increase sales by revitalizing the brand and reinforcing itself as a place for a "fresh, high-quality and great-tasting alternative to traditional fast food offerings." The Denver company owns and operates only seven of the nearly 2,100 Quiznos restaurants around the country. The rest are owned and operated by franchisees and weren't part of the bankruptcy proceedings. Quiznos provides franchise owners with training, store designs and marketing support.

Argentina said Monday night that it will send a delegation to meet with a court-appointed lawyer on July 7 as it tries to resolve a dispute with a small group of creditors that could see the South American country default for a second time in 13 years, the Wall Street Journal reported today. Argentina's long-running battle with hedge funds in U.S. courts entered a critical phase after U.S. District Judge Thomas Griesa on June 27 blocked the country from making $539 million in interest payments that were due on some of its bonds Monday. Argentina will likely default if it can't get that money to bondholders before a 30-day grace period expires in July. The judge has ruled that Argentina must pay the hedge funds that are suing to collect on defaulted bonds at the same time it pays investors who own bonds the country issued after its 2001 default. (Subscription required.)
http://online.wsj.com/articles/argentina-holdouts-have-yet-to-reach-agr…

To learn more about the next steps for Argentina and sovereign debt restructuring, be sure to watch James Millstein’s June 20 presentation, which he made at ABI’s Cross-Border Symposium: http://news.abi.org/videos

Creditors of bankrupt Energy Future Holdings, Texas's biggest power company, urged a judge to slow its chapter 11 case and warned if a key refinancing proposal was approved it might block better deals from being considered, Reuters reported yesterday. In the past week, the company's majority stake in a powerlines business known as Oncor has sparked a flurry of activity comparable to a merger-type bidding war as creditors scramble to get their hands on the unit's steady cash flow. The company wants Bankruptcy Judge Christopher Sontchi to allow its EFIH unit, which owns Oncor, to borrow around $2 billion to fund a settlement that will redeem high-yield debt, saving $11 million a month in interest payments. The loan is backed by the company's unsecured bondholders. Creditors not involved in financing the DIP, or debtor-in-possession, loan have called it "unprecedented" because it will convert into a stake of about 60 percent of Energy Future when the company exits bankruptcy. The potential to gain control over the power company has sparked competing DIP loan proposals, including one with $1.6 billion of backing by NextEra Energy Inc, a Florida company that also has a large Texas presence.

An investment group that owns a piece of a major telecom firm in the Republic of Georgia filed for bankruptcy in a U.S. court on Monday, facing a deadline to pay more than $11 million to noteholders, Dow Jones Daily Bankruptcy Review reported today. MIG LLC, which operates as Metromedia International Group Inc., filed for chapter 11 protection in Wilmington, Del., blaming a dispute that stopped the flow of profits from its only major investment: a 46 percent stake in the ownership group that owns telephone provider Magticom Ltd.

James River Coal Co. is asking a bankruptcy court to give it more time to propose a chapter 11 plan, the Associated Press reported today. Richmond, Va.-based James River said in a motion that it needs an additional 100 days to propose a plan while it searches for a buyer or a sponsor for the plan. James River says numerous matters need to be resolved, including whether a reorganization plan or a liquidation plan would best serve the interests of creditors and other relevant parties. A hearing on the motion is set for July 10.

Moody's Investors Service said yesterday that Puerto Rico's new debt restructuring law will increase the default risk for public corporations, Reuters reported yesterday. The law "signals the Commonwealth's diminished willingness to support public corporations that have historically relied on the commonwealth's general tax revenues to pay for operating deficits and borrowing needs," Moody's said. The law, passed on June 25, lays out a bankruptcy-like process for some public corporations. It applies to semi-autonomous public authorities that manage Puerto Rico's infrastructure and are unable to pay their debts.

Victims of the Ponzi schemes of Bernard Madoff and Allen Stanford, two of the largest in U.S. history, suffered setbacks yesterday as the U.S. Supreme Court refused to hear appeals in two cases seeking to recoup more money for them, Reuters reported yesterday. In the Madoff case, the court rejected a request by Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, to review the dismissal of Picard's claims against banks he accused of enabling Madoff's fraud. Separately, the court rejected a request by Ralph Janvey, a receiver unwinding Stanford's businesses, to review a ruling that blocked him from pursuing claims against Stanford employees on behalf of the receivership's creditors, not the businesses themselves. In both cases, lower courts concluded that Picard and Janvey lacked standing to bring their respective claims. The Supreme Court did not give reasons for its decisions, which leave intact a June 2013 ruling in the Madoff case by the federal appeals court in New York, and an August 2013 ruling in the Stanford case by the federal appeals court in New Orleans.
http://www.reuters.com/article/2014/06/30/usa-court-madoff-stanford-idU…

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/

A pair of Wall Street investment firms is challenging Puerto Rico's new law allowing some public agencies to restructure their debt, saying that it violates the U.S. Constitution, the Wall Street Journal reported today. Funds managed by Franklin Templeton Investments and OppenheimerFunds Inc. asked the U.S. District Court for the District of Puerto Rico to block the law, arguing that only Congress is allowed to create bankruptcy rules. The funds hold about $1.7 billion combined in debt from the Puerto Rico Electric Power Authority, which they say they believe will seek to restructure its debt under the act "imminently." Puerto Rico lawmakers last week approved legislation allowing some agencies such as the island's power, water and transportation authorities to restructure their debt. Those agencies have a combined $19.4 billion in bonds outstanding, according to estimates from Barclays PLC. The law doesn't apply to Puerto Rico's general-obligation or sales-tax bonds, which are backed by the island's taxing authority.

Argentina is poised to miss a bond payment today, putting the country on the brink of its second default in 13 years, after a U.S. court blocked the cash from being distributed until the government settles with creditors from the previous debt debacle, Bloomberg News reported yesterday. The nation has a 30-day grace period after missing the $539 million debt payment to seek an accord with a group of defaulted bondholders led by billionaire Paul Singer’s NML Capital Ltd. and to prevent a default on its $28.7 billion of performing global dollar bonds. Both Argentina and NML have said that they’re open to talks. A decade-long battle between Argentina and holdout creditors from the country’s $95 billion default in 2001 is coming to a head. The U.S. Supreme Court on June 16 left intact a ruling requiring the country to pay about $1.5 billion to holders of defaulted debt at the same time it makes payments on restructured bonds. Argentina last week transferred funds to its bond trustee to pay the restructured notes, only to have U.S. District Court Judge Thomas Griesa order the payment sent back while the parties negotiate.
http://www.bloomberg.com/news/print/2014-06-29/argentina-at-brink-of-de…

To learn more about the next steps for Argentina and sovereign debt restructuring, be sure to watch James Millstein’s June 20 presentation, which he made at ABI’s Cross-Border Symposium: http://news.abi.org/videos