%1

A judge sided with a group of creditors seeking to force defunct consumer law firm Jacoby & Meyers Bankruptcy LLP into chapter 7 protection, saying that it was “the right thing” to have the court oversee the firm’s wind-down for the benefit of former clients, the Wall Street Journal reported today. “This is a case that needs to exist,” Bankruptcy Judge Shelley Chapman said during a hearing yesterday over the objection of an attorney for Jacoby & Meyers Bankruptcy, who argued that a trustee put in place when the firm closed its doors in December has been doing an adequate job. “Information more than anything else is needed here,” Judge Chapman said, adding that a request to move the case to Chicago also would be denied. Judge Chapman said she would wait to enter an official order putting the firm into bankruptcy until Jacoby & Meyers Bankruptcy had a chance to respond.

A bitcoin business that planned to use the blueprints for the once-successful Japanese bitcoin exchange Mt. Gox couldn't convince a bankruptcy judge yesterday that an early sale proposal to salvage the frozen exchange is being unfairly executed, the Wall Street Journal reported today. Bankruptcy Judge Stacey Jernigan rejected complaints raised by CoinLab Inc., which has sued Mt. Gox for $75 million after their licensing agreement fell apart and recently complained that a purchase offer from investor group Sunlot Holdings could be forced upon Mt. Gox customers "without any real scrutiny." Mt. Gox's lawyers told Judge Jernigan yesterday that a team of financial professionals in charge of the exchange, led by Nobuaki Kobayashi, hasn't committed to the Sunlot deal and is still open to other proposals — statements that seemed to diffuse CoinLab's allegations. Mt. Gox filed for bankruptcy in February and suspended trading after announcing that it lost about 850,000 bitcoins, or roughly 7 percent of the world's bitcoins with a value of $473 million.

LightSquared and its creditors, including Dish Network Corp. Chairman Charles Ergen, will go into court-ordered mediation to settle on a plan to restructure the bankrupt wireless venture, Reuters reported yesterday. Bankruptcy Judge Shelley Chapman had given sides until yesterday to forge a consensual plan to get LightSquared out of chapter 11, or else mediate under Bankruptcy Judge Robert Drain. Paul Basta, a lawyer for an independent committee supervising the LightSquared restructuring, said yesterday that the sides had made some progress on a new deal but needed help getting "across the finish line."

The U.S. Bankruptcy Court in Wilmington, Del., yesterday announced the forthcoming retirement of Judge Peter J. Walsh, effective Jan. 1. Calling Judge Walsh “irreplaceable,” the announcement nevertheless says that court officials are looking for a new judge to take his spot on the bench that has consistently presided over some of the biggest corporate restructurings in recent decades. Judge Walsh first joined the bankruptcy bench in 1993. For years he was one of only two sitting bankruptcy judges in Delaware, first with now-retired Judge Helen Balick and then with current Judge Mary Walrath, leaving him with a heavy caseload. He served as chief judge from September 1998 to September 2003.

Debtors involved in the Garlock Sealing Technologies bankruptcy case have responded to the asbestos personal injury claimant committee’s motion to adjourn the debtors’ request for a bar date for current settled asbestos claims, saying that the committee is alone in its arguments, LegalNewsline.com reported yesterday. The debtors, which include Garlock, Garrison Litigation Management Group and The Anchor Packing Company, responded to the committee’s motion to adjourn, arguing that all litigation regarding disputed claims should play out at the same time as the confirmation process rather than delaying the process as the committee requests. The debtors requested a bar date for filing settled Garlock asbestos claims on April 28 in U.S. Bankruptcy Court for the Western District of North Carolina.

An attorney for Overseas Shipholding Group Inc., one of the world's largest publicly traded tanker holding companies, told a U.S. judge on Friday a deal was close with noteholders that would clear the way for creditors to vote on its bankruptcy exit plan, Reuters reported on Friday. Noteholders agreed to drop their objection to the company's $1.5 billion rights offering for a chance to participate in the stock sale, said Luke Barefoot, an attorney with Cleary Gottlieb Steen & Hamilton, which represents the company. The rights offering is a key component to Overseas Shipholding's exit plan and would allow existing stockholders to buy newly issued stock in the company. The plan is also backed with $1.35 billion in financing from Jefferies Finance.

A bankruptcy court judge on Friday approved a $570 million financing package to get Momentive Performance Materials through bankruptcy, over the objections of unsecured creditors who say the deal will threaten their recoveries, Reuters reported yesterday. Momentive, the maker of silicone and quartz products that is owned by private equity group Apollo Global Management LLC, filed for chapter 11 protection in April with a prearranged restructuring that had the support of key stakeholders. The plan, which still needs court approval, includes a $600 million rights offering and $1.3 billion in exit loans from JPMorgan Chase & Co. To get Momentive through chapter 11, JPMorgan also arranged financing in the form of a $300 million loan and a $270 million credit facility. The bulk of that package had already been approved by Bankruptcy Judge Robert Drain, but unsecured creditors, including Aurelius Capital Management, objected this month to the approval of the rest.

Savient Pharmaceuticals Inc., a developer of a treatment for gout before its business was sold, got approval of a liquidating chapter 11 plan, with Bankruptcy Judge Mary Walrath signing a confirmation order on May 19, Bloomberg News reported yesterday. The only unresolved objections to the plan, overruled by Judge Walrath, were those of Savient’s shareholders, who said that the cancellation of their holdings was unfair. Chief Liquidation Officer Matthew Bazley said the proceeds of a $120.4 million sale to Crealta Pharmaceuticals LLC weren’t sufficient to cover creditor claims and provide a distribution to shareholders. The liquidating plan was made possible by a settlement between secured noteholders and unsecured creditors following the official creditors’ committee’s challenge to the validity of the secured noteholders’ $147.5 million claim.

A private-equity firm behind the Free Lance-Star’s biggest loan could become the Fredericksburg, Va., newspaper's new owner after it won a bankruptcy auction last week, Dow Jones Daily Bankruptcy Review reported today. An affiliate of Sandton Capital put in the winning bid for the 300-worker publication, which sells about 43,000 copies of its newspaper on Sundays. The publication's owner filed for bankruptcy in January, blaming declining circulation and advertising revenues.

A group of creditors attempting to force defunct consumer law firm Jacoby & Meyers Bankruptcy LLP into chapter 11 protection are urging a court to rule that bankruptcy is the best way to protect unhappy clients left in the lurch by the firm’s demise, the Wall Street Journal reported today. In a court filing on Tuesday, creditors like online document service Legal Zoom say that “the total lack of disclosure and transparency” surrounding the firm’s December 2013 closure prompted them to file an involuntary bankruptcy petition against the firm in March. Jacoby & Meyers Bankruptcy was formed in June 2012 as an alliance between national consumer firm Jacoby & Meyers LLC — which lent its well-known brand name to the partnership — and the bankruptcy practice of Chicago lawyer Thomas Macey. A year and a half later, Jacoby & Meyers Bankruptcy closed and put itself into the hands of a trust intended to liquidate the firm and repay its debts. Creditors say that the firm’s trustee isn’t going far enough and would like to see the firm unwound through bankruptcy.