%1

A Gordon Brothers Group division has offered to purchase women's clothing retailer Dots at a bankruptcy auction next week, saying that it is prepared to begin shutting down roughly 360 stores on March 1, Dow Jones Daily Bankruptcy Review reported today. At a court hearing held on Friday, Bankruptcy Judge Donald Steckroth characterized the bid from Gordon Brothers as a "liquidating bid" and denied the bidder's request for special fees as a reward for stepping out with a lead offer.

When Howrey trustee Allan Diamond struck a $41 million settlement with Baker & Hostetler last year to claim a chunk of the fees tied to a pair of contingency cases that Howrey partners took with them amid the firm's 2011 collapse, the deal handed the defunct firm's bankruptcy estate some much-needed cash to help pay off its largest secured creditor, Citibank, AmericanLawyer.com reported on Friday. But that wasn't the settlement's only effect as the financial infusion it yielded will come back to haunt former Howrey partners this year in the form of a hefty tax bill — and some of them don't believe that's fair. Under provisions of partnership and tax laws, former Howrey partners are obligated to pay taxes on the $41 million the estate took in related to the Baker & Hostetler settlement, as well as recoveries from other lingering contingency fee cases. That money will appear as "phantom income" on those attorneys' tax filings this year, with each of them liable to cover a portion of what could be a sizable tax obligation. Three former Howrey partners — all of whom joined the firm in July 2009 when Howrey absorbed intellectual property boutique Day Casebeer Madrid & Batchelder — asked bankruptcy judge last week to rule that they are not obliged to pay taxes on the estate's settlement-related income.

One of five former Bernard Madoff aides on trial for abetting his massive Ponzi scheme will face two fewer counts when the case goes to a jury, after a judge agreed to throw out charges that he arranged for his son to get a no-show job at the firm, Reuters reported on Saturday. In an opinion filed on Friday, U.S. District Judge Laura Taylor Swain granted Daniel Bonventre's motion to dismiss the counts, which charged him with violating federal law by causing false documents to be filed with the Department of Labor. However, Swain denied motions from Bonventre and from two other defendants, portfolio manager Annette Bongiorno and Joann Crupi, to dismiss a number of other counts related to alleged tax violations.

An entity created by the investor group would receive a $1 million breakup fee and be reimbursed for up to $1.75 million of its costs if the bankruptcy court selects another buyer for First Mariner Bank, according to a filing in the chapter 11 case of the bank’s parent company, First Mariner Bancorp, the Baltimore Business Journal reported today. A group of investors led by Baltimore native and New York hedge fund manager Howard Feinglass has a deal to buy First Mariner Bank and recapitalize it with $85 million to $100 million. The chapter 11 filing affects only First Mariner Bancorp, not First Mariner Bank or its customers. RKJS Bank, an entity the investor group created, will serve as the stalking-horse bidder in the bankruptcy auction.

Long Island, N.Y.-based Long Beach Medical Center filed for chapter 11 protection on Wednesday to sell what remains of its assets after Hurricane Sandy devastated the hospital a little more than a year ago, the Wall Street Journal reported today. South Nassau Communities Hospital has offered $21 million for the assets, a bid that will be tested at auction. The funding for the purchase came from a $22 million grant that the state of New York provided to execute the sale and build an urgent-care facility on the hospital grounds. The Dormitory Authority of the State of New York is providing an additional $6 million grant to South Nassau Communities. South Nassau Communities is lending that money to Long Beach Medical to fund the chapter 11 case and help it continue operating. Long Beach Medical received $1.5 million of the funding before the bankruptcy filing and is requesting $4.5 million in the form of bankruptcy financing, which will require bankruptcy-court approval.

Saint Francis Hospital in New York's Hudson Valley got permission from Bankruptcy Judge Cecelia Morris on Wednesday to be taken over by Westchester Country Health Care Corp., which offered more than $30 million for the struggling 333-bed facility, Dow Jones Daily Bankruptcy Review reported today. Saint Francis Hospital officials picked that bid over an earlier $24 million offer from another health-care provider called Health Quest Systems Inc., which has ties to the nearby Vassar Brothers Hospital.

Atlantic Express Transportation Corp. has asked a bankruptcy judge to approve National Express Corp.'s $11.75 million bid for its Philadelphia school district busing operations, Dow Jones Daily Bankruptcy Review reported today. Following a Feb. 11 auction, National Express emerged with the highest offer for the Philadelphia-based assets, which include 364 buses. Should Bankruptcy Judge Sean H. Lane consent to the sale, Atlantic Express would receive $8.75 million in addition to about $3 million in assumed liabilities.

Edison Mission Energy will emerge from bankruptcy liability-free under a settlement that gives its parent, Edison International, a net benefit of $200 million, Chief Executive Officer Ted Craver of Edison International said, Bloomberg News reported yesterday. The settlement “reduces risk and allows investors to focus more on the core Edison International investment thesis,” Craver said yesterday. The settlement, which needs bankruptcy court approval, was announced today in a filing with the U.S. Securities and Exchange Commission. Edison Mission, which filed for bankruptcy in December 2012, is seeking to emerge by selling its business to NRG Energy Inc. for $2.64 billion.

The plan of reorganization proposed by the Archdiocese of Milwaukee in the organization's chapter 11 proceedings is the best way to provide care for abuse survivors, while ensuring the archdiocese can continue its spiritual, educational and charitable mission, according to a commentary today in the Milwaukee Journal Sentinel. The reorganization plan is fair for abuse survivors because, first and foremost, it provides therapy for as long as they need it and, second, it provides those with eligible claims a financial settlement, according to the commentary. In the last 10 years alone, according to the commentary, the archdiocese has exhausted its resources, properties and investments to provide more than $33 million in settlements with abuse survivors.

Creditors of Lehman Brothers Holdings Inc. will receive hundreds of millions of dollars from the estate of the bankrupt firm following a settlement with Federal Home Loan Mortgage Corp, the Wall Street Journal reported today. Bankruptcy Judge Shelley C. Chapman yesterday approved a $767 million payout from Lehman to settle Freddie Mac's claims over two loans the mortgage giant made to Lehman before the investment bank's 2008 collapse. Lehman creditors already have received $60 billion out of the more than $70 billion Lehman's estate hopes to return, and more is expected in the near future. The deal is structured similarly in some ways to a recently approved settlement between Lehman and Fannie Mae, which will receive about $540 million for its claim based on the latest calculations. Freddie and Fannie will hand over loan information that will allow Lehman to pursue claims against mortgage originators for alleged misrepresentations. Lehman's lawyers said those claims can be substantial.