%1

A newly formed shareholder group is ready to rumble in Overseas Shipholding Group Inc.'s bankruptcy, arguing in its first court appearance that the shipping company's restructuring deal doesn't offer enough value to equity and is the product of "flawed" negotiations, the Wall Street Journal reported today. Appointed this week, the official committee of Overseas Shipholding's equity holders said that it needs time to investigate a deal that locks in the company's lenders to a restructuring deal that would see the lenders own nearly all of the company and pay creditors in full while leaving existing shareholders roughly $60 million in stock and warrants. Shareholder committee attorney Steven Pohl yesterday told Bankruptcy Judge Peter Walsh that shareholders believe there's "a whole lot more value" for equity than what the plan currently proposes. He accused the company and its lenders of pushing a restructuring strategy that ignores shareholders' interests.

A bankrupt British Virgin Islands luxury resort owner was assailed by lender FirstBank Puerto Rico for an allegedly “false and misleading” court filing saying a settlement had been reached over the bank’s claims, Bloomberg News reported today. The resort owner, Scrub Island Development Group Ltd., filed a restructuring proposal on Wednesday in U.S. Bankruptcy Court in Tampa, Fla., saying that it had an agreement with FirstBank on the treatment of almost $120 million in claims. The statements in the proposed reorganization plan and an accompanying explanatory disclosure statement are “completely false and misleading” and the bank “never agreed to the terms of this nature,” said Lawrence Odell, FirstBank’s general counsel. FirstBank filed an initial objection to the plan making similar statements. Under the proposed plan as filed by Scrub Island, the bank would get a new claim of $37.5 million against the reorganized company, which would be reduced to $30 million with an initial cash payment and then paid over five years. FirstBank would get $84.9 million in unsecured deficiency claims that would receive no recovery.

General Motors Co. was hit with a lawsuit on Wednesday demanding that the company be held liable for allegedly concealing ignition problems before its 2009 bankruptcy, Reuters reported yesterday. The ignition switch problems led to the recall of 1.6 million vehicles last month. GM is a different legal entity from the one that filed the 2009 bankruptcy that sent shock waves through the U.S. economy. The so-called new GM is not responsible under the terms of its bankruptcy exit for legal claims relating to incidents that took place before July 2009. Those claims must be brought against what remains of the "old" or pre-bankruptcy GM. But the proposed class action, filed in federal court in California, said plaintiffs should be allowed to sue over the pre-bankruptcy actions, "because of the active concealment by Old GM and GM."
http://news.yahoo.com/gm-must-pay-pre-bankruptcy-ignition-deception-law…

In related news, Chief Executive Officer Mary Barra is scheduled to testify at a U.S. congressional hearing on April 1 amid a probe into why it took more than a decade to recall vehicles equipped with an ignition defect that’s been linked to a dozen deaths, Bloomberg News reported yesterday. National Highway Traffic Safety Administration Acting Administrator David Friedman will also testify to the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee, said committee chairman Fred Upton (R-Mich.).
http://www.bloomberg.com/news/2014-03-21/gm-ceo-barra-to-testify-before…

Medical transcription company M*Modal filed for bankruptcy protection today as the firm owned by J.P. Morgan Chase & Co's private-equity arm seeks to reduce debt, Reuters reported today. M*Modal, which was taken private by One Equity Partners in a $1.1 billion all-cash deal in 2012, listed assets and liabilities in the $500 million to $1 billion range in its bankruptcy petition. M*Modal said it is in "constructive discussions" with its lenders and bondholders regarding the terms of a consensual financial restructuring plan. The company said it expects cash on hand, combined with funds generated from ongoing operations, to provide sufficient liquidity to continue operating through the restructuring process.

Lawyers looking to sue General Motors Co. after its global recall of 1.6 million vehicles over an ignition defect may find their path blocked by a judge’s order five years ago in the company’s reorganization, Bloomberg News reported yesterday. Allegations about deaths or economic losses occurring before July 2009 were barred by a bankruptcy judge when he approved the sale of the automaker’s assets to the new GM. Attorneys are now examining pre-bankruptcy deaths and claims with a view to getting the ban lifted. Clarence Ditlow, executive director of the Washington-based Center for Auto Safety, said that he would like GM to set up a fund as a sign of goodwill. Such a move may resolve claims that deaths and injuries were tied to the faulty ignition switches, a problem GM admitted it knew of more than a decade ago and failed to fix. By court order, the new GM can’t be held responsible for any product-related liabilities, such as wrongful death, personal injury or property damage, except those arising on or after July 10, 2009, when the new entity was born. Challenging GM’s immunity would require asking the judge who oversaw the historic U.S.-backed bankruptcy to reconsider his ban on claims. The time to revoke court orders dating from GM’s bankruptcy “has long past,” said Harvey Miller of Weil Gotshal & Manges LLP, the automaker’s bankruptcy lawyer. He said that the company’s creditors diligently examined its liabilities and potential exposure for possible damage suits.

Bankruptcy Judge Kevin Gross signed a final decree on Monday ending the Los Angeles Dodgers' time in bankruptcy court, the Los Angeles Times reported today. The bankruptcy cases of the Dodgers and related entities "are hereby closed," Gross wrote in an order that ended the team's stay in bankruptcy court at 995 days. Frank McCourt, the Dodgers' former owner, took the team into bankruptcy on June 27, 2011, after Commissioner Bud Selig rejected a proposed television contract that would have served as McCourt's financial lifeline. After Judge Gross ruled that he would not allow McCourt to turn the bankruptcy proceedings "into a trial on the commissioner," McCourt agreed to sell the team — with the court, not Selig, having final authority to approve the sale. On March 27, 2012, McCourt sold the Dodgers for $2 billion — a record sale price for a North American sports franchise — to Guggenheim Baseball Management, a group led by Mark Walter, Stan Kasten and Magic Johnson.

Edison Mission Energy won court approval of a plan to exit chapter 11 protection via its $2.6 billion sale to NRG Energy Inc., the Wall Street Journal reported today. Bankruptcy Judge Jacqueline Cox yesterday confirmed Edison Mission's chapter 11 plan, which the company recently overhauled to incorporate a settlement with its parent company that will boost creditor recoveries. Under the plan, Edison Mission's operations will be sold to NRG, which will pay $2.285 billion in cash and $350 million in stock. Sale proceeds will be used to pay Edison Mission's creditors, most of whom support the plan.

Tokyo-based bitcoin exchange Mt. Gox on Sunday filed for chapter 15 bankruptcy in the U.S., more than a week after it filed for bankruptcy in Japan and disclosed that it had lost about 750,000 of its customers’ bitcoins, MarketWatch.com reported yesterday. Mt. Gox filed for chapter 15 in Dallas and is being represented by Baker & McKenzie, which is also the law firm representing Mt. Gox its civil rehabilitation proceeding in Japan. Mt. Gox’s chapter 15 filing showed it is seeking relief from two parties in the U.S. with pending litigation: CoinLab Inc. and Gregory Greene, a plaintiff in the class-action lawsuit who alleges he lost $25,000 worth of bitcoin. The class-action lawsuit was filed against Mt. Gox and Chief Executive Mark Karpeles on Feb. 28 in Illinois on behalf of all people in the U.S. who held bitcoins in the exchange by the law firm Edelson PC. The lawsuit seeks the return of the customers’ funds and damages against Mt. Gox and Karpeles.

Pizza chain Sbarro LLC has filed for bankruptcy protection for the second time in three years after struggling with too much debt and fewer customers in malls that house many of its restaurants, Reuters reported yesterday. Lenders would take control of the Melville, N.Y.-based company under a pre-packaged chapter 11 reorganization, which Sbarro on Monday said could allow it to made a "quick exit" from bankruptcy before May 7. Sbarro expects to cut its debt load by more than 80 percent, and said nearly all its lenders support its restructuring, which requires court approval.

Questions about the safety of its California lead-recycling operation continue to haunt Exide Technologies Inc., a battery maker operating under bankruptcy protection, Dow Jones Daily Bankruptcy Review reported today. The company last week agreed to allow a $40 million lawsuit filed by the South Coast Air Quality Management District to move ahead in spite of the chapter 11 bankruptcy shield that protects companies from being targeted in litigation. The California agency, which regulates air quality in Los Angeles, Orange, Riverside and San Bernardino counties, says that Exide's operation means an elevated risk of cancer for workers and residents in Vernon, Calif.