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A bankruptcy judge cleared NII Holdings Inc.’s top executives to potentially earn millions of dollars in bonuses, telling a federal watchdog that its objection to the payout plan “completely stunned” her, the Wall Street Journal reported today. Bankruptcy Judge Shelley Chapman yesterday authorized the Latin American Nextel carrier to pay its executives and senior managers bonuses tied to the company’s performance and the success of its chapter 11 case. The targeted total payout is approximately $9 million, though that could rise or fall depending upon how the company does. Before approving the plan, Judge Chapman questioned why a government attorney was objecting to the bonuses, which she called “a classic incentive program.”

GT Advanced Technologies Inc. said that it is pursuing the sale of its sapphire furnaces and will pay former partner, Apple Inc., a portion of the cash it gets from the sale, Reuters reported yesterday. The furnaces were installed to make sapphire glass for Apple, which loaned GT Advanced $439 million for the project. GT Advanced, which invested heavily into increasing production of sapphire materials for Apple, blamed the supply agreement for forcing it into bankruptcy in October, a move that shocked investors and sent its stock plummeting more than 90 percent to under $1 before Nasdaq suspended the shares.

Some of the country’s top restructuring professionals who contributed to the final report of the ABI Commission to Study the Reform of Chapter 11 released earlier this month made it clear that, aside from strengthening tools for a bankrupt company, they want to make the process cheaper, according to a post yesterday on the Wall Street Journal Bankruptcy Beat blog. “Bankruptcy has always been expensive, and there has always been an effort to rein in excessive costs,” said Prof. Kenneth Klee, who helped engineer the 1978 overhaul and was a member of the Commission. The Commission’s recommendations propose to clarify rules on dozens of issues on which bankruptcy judges have disagreed, giving lawyers — in theory — less to fight about. Two proposals address a big reason why costs can spiral upward: Bankrupt companies have to pay the legal bill for others. Besides their own bankruptcy lawyers, investment bankers, financial advisers, accountants and public relations firms, bankrupt companies are legally obligated to pay the bills of the creditor committee that forms to advocate for vendors, employees and other unsecured creditors. (Subscription required.)
http://blogs.wsj.com/bankruptcy/2014/12/22/proposed-bankruptcy-fixes-wo…

To read a copy of the Commission’s final report and its recommended principles on professional compensation, please click here: http://commission.abi.org.

Specialty Hospitals of Washington, D.C., said yesterday that it has exited bankruptcy protection under the ownership of hedge fund Silver Point Capital and new Chief Executive Marc Ferrell, Dow Jones Daily Bankruptcy Review reported today. Silver Point purchased Specialty Hospitals' long-term acute care and nursing homes after buying up $40 million in the company's debt at a discount earlier this year. Specialty Hospitals entered chapter 11 bankruptcy in April after negotiating a sale to Silver Point Capital. The hospital chain was facing an involuntary bankruptcy filing brought by a group of creditors.

Victims of Bernard Madoff’s $17.5 billion fraud are set to receive a fresh round of payments totaling about $322 million — the latest distribution since the biggest Ponzi scheme in U.S. history fell apart six years ago, Bloomberg News reported yesterday. The proposed payout will boost the sum returned to victims to about $7.2 billion, or almost 49 percent of their lost principal, Irving Picard, the trustee unwinding Madoff’s defunct company, said yesterday. Picard has raised much of the cash with lawsuits against former Madoff customers who profited from the fraud by taking more out from their accounts than they put in. The trustee last month reached $10 billion in recoveries, several billion of which is locked up in drawn-out litigation with investors seeking larger payouts.

A Texas jury has found Credit Suisse fraudulently enticed investors to back a $540 million loan for the Lake Las Vegas resort, only to have the borrower quickly default, Reuters reported yesterday. The jury set damages at $40 million, according to court documents filed on Friday in state court in Dallas. Zurich-based Credit Suisse was found to have used inflated appraisals to convince an affiliate of Highland Capital Management in 2007 to refinance the Nevada resort community, which sought chapter 11 protection a year later.

The Catholic Diocese of Spokane, Wash., can take its legal malpractice claim to trial against a law firm that handled its 2007 bankruptcy over priest sex abuse claims, a federal bankruptcy judge ruled, the Associated Press. The decision on Wednesday means former Spokane bishop Blase Cupich, who now serves as archbishop of Chicago, will likely have to testify in February about his decision to seek $3.6 million in legal fees from the Paine Hamblen law firm. Bishop Cupich contends that Paine Hamblen lawyers underestimated how many victims would come forward with sex abuse claims after the bankruptcy was first resolved. A $1 million fund was created to handle future claims, based on Paine Hamblen's estimates of how much it would cost the diocese to settle the allegations. But the fund was quickly depleted, raising the prospect of foreclosure on some Catholic parishes that had been put up as collateral. In documents submitted to the court, Bishop Cupich said he believed Paine Hamblen bungled the bankruptcy. The bankruptcy was settled before Bishop Cupich became bishop of Spokane.

The U.S. Securities and Exchange Commission suffered a setback on Friday in its efforts to collect a bigger judgment against Texas tycoon Sam Wyly and his late brother Charles' estate than the nearly $300 million it has already won, Reuters reported. U.S. District Judge Shira Scheindlin ruled that her initial award in September reflected the "best measure" of the Wylys' ill-gotten gains and said she would not impose an alternative amount unless she was reversed on appeal. The SEC had been seeking $192.7 million plus interest from the Wylys, compared with the $187.7 million before interest the judge previously awarded. While Judge Scheindlin called the SEC's calculations under its latest theory "reasonable," she ordered the figure recalculated to exclude a large amount of alleged gains involving securities that were never sold.

Several major broadcasters refused to back down Friday from attempts to control when and to whom bankrupt Aereo Inc. can sell its technology, Dow Jones Daily Bankruptcy Review reported today. Facing an impasse between the failed TV-streaming service and broadcasters including CBS Corp., Walt Disney Co.'s ABC, Comcast Corp.'s NBC and 21st Century Fox Inc.'s Fox, Bankruptcy Judge Sean Lane held off on approving a proposal outlining how Aereo plans to sell its assets. As of Friday afternoon, Aereo and broadcasters were privately discussing ways to resolve differences on the sale process, including at what point Aereo can begin deleting its servers and how much time broadcasters would have to oppose any prospective buyers.

A $1 billion pact between Nortel Networks Corp.'s U.S. unit and bondholders won court approval Thursday over the protests of the one-time Canadian technology giant, the Wall Street Journal reported today. The ruling from Bankruptcy Judge Kevin Gross means distressed-debt investors could stand to recover as much as $5 billion from Nortel’s collapse in 2009, including more than $1 billion in interest on $4 billion worth of debt. The Canadian parent company tried to derail the deal between Nortel U.S. and bondholders, arguing the settlement was the product of a defective process. The U.S. unit defended the settlement as a compromise on a claim for interest that could have reached $1.6 billion.