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Montreal, Maine & Atlantic Railway Ltd.'s bankruptcy trustee is suing the owner of the crude oil its train was carrying when it derailed last summer, saying that the company's alleged negligence contributed to the accident that killed 47 people and partially destroyed a small Quebec town, the Wall Street Journal reported on Saturday. Chapter 11 trustee Robert J. Keach on Thursday filed a lawsuit in bankruptcy court against World Fuel Services Corp. of Miami and several other companies, accusing them of falsely identifying the crude oil as a low danger when in fact it was highly volatile and dangerous. Keach said that World Fuel also knew — or should have known — that the type of tank cars carrying the oil were prone to rupture upon derailment, making the cars "unsafe and unsuitable" for the transport of the crude oil. Had MM&A known of the true dangers of the crude oil, Keach said, the railway would have taken such safety measures as not leaving the train unattended and parking it on a blocked side track. Instead, he said MM&A parked the train on a main track with a slight descending grade, from which the unattended train began its ill-fated descent into the Quebec town of Lac-Mégantic early on July 6.

Subprime mortgage lender Residential Capital LLC has reached an agreement with a group of insurers that guarantees a $150 million payment — part of parent-company Ally Financial Inc .'s larger $2.1 billion contribution — to its bankruptcy estate later this year, Dow Jones Daily Bankruptcy Review reported today. Pending approval of the settlement from Bankruptcy Judge Martin Glenn, Ally will pay ResCap's creditors the first $150 million it collects from insurance carriers within 30 days of receiving those funds. The remaining $1.95 million is to be paid in cash by Sept. 30. A hearing related to the settlement is scheduled for Feb. 20.

Tuscany International Drilling Inc filed for chapter 11 protection yesterday, a court filing showed, as liquidity constraints pressed the Canadian contract driller to cut its debt load and explore strategic alternatives, Reuters reported today. The oil driller said that revenue and rig utilization have fallen over the last year due to stiff competition in the oilfield services market, leading to cash shortages. The company estimated liabilities and assets of $100 million to $500 million, according to the filing. As per an amended credit agreement with its lenders, the company said that it will have about $237 million of outstanding debt.

Chemical maker W.R. Grace & Co received approval to line up about $1.55 billion in bankruptcy exit financing, Reuters reported yesterday. Grace will use the money to pay all outstanding claims, including $1.1 billion to its lenders, removing the last obstacle to its emergence out of bankruptcy protection. The remaining amount will go towards funding trusts that will be created to pay asbestos-related injury claims, an earlier court filing showed. The company is likely to emerge from bankruptcy on Jan. 31.

Bankruptcy Judge James Peck approved Lehman Brothers Holdings Inc.'s settlement with Fannie Mae over $18.9 billion in mortgage claims, one last major decision as Lehman's bankruptcy judge before his retirement at the end of the week, the Wall Street Journal reported today. His last major approval, over mortgage loans and mortgage-backed securities Lehman sold Fannie in the years before the financial crisis, was apropos considering the housing industry's contribution to Lehman's demise. No one objected to the settlement. Fannie Mae, which originally said that it was owed $18.9 billion, will receive a general unsecured claim of $2.15 billion against Lehman. Bankruptcy Judge Shelley C. Chapman will be taking over the Lehman case following the retirement of Judge Peck.

Two families that own major Hispanic-oriented grocery store chains throughout the Southwest got approval from a federal judge Tuesday to purchase the struggling Pro's Ranch Market chain's 11 stores out of bankruptcy, Dow Jones Daily Bankruptcy Review reported today. After reviewing the purchase offer at a court hearing, Bankruptcy Judge Sarah Sharer Curley said that she would approve it, according to Pro's Ranch Market attorney Frederick Petersen. The buyers' offer is worth about $53.6 million, according to court documents.

Hybrid Tech Holdings LLC is seeking to appeal a bankruptcy judge's ruling that capped its right to credit bid for the failed luxury hybrid automaker Fisker Automotive Inc. at $25 million, Bloomberg News reported today. The case should go directly to the U.S. Court of Appeals in Philadelphia, bypassing the U.S. District Court, to let Fisker's auction proceed efficiently next month and to ensure the appeal isn't mooted by a sale, Hybrid said in court papers filed on Monday. Bankruptcy Judge Kevin Gross ruled on Jan. 17 that Hybrid's ability to use debt forgiveness to bid for the Anaheim, Calif., automaker's assets was properly limited at $25 million rather than the $75 million Hybrid proposed. The judge said a limit would promote competitive bidding that wouldn't otherwise occur if Hybrid was permitted to use the full amount of its claim. Judge Gross also cited questions over whether Hybrid's claim is fully secured.

The Roman Catholic Diocese of Stockton, Calif., which is the 10th Catholic diocese in the U.S. to enter chapter 11 protection as a result of increasing sexual-abuse claims, has received a judge's approval of its initial bankruptcy requests, the Wall Street Journal reported today. The ruling by Bankruptcy Judge Christopher M. Klein on Friday will allow the diocese to continue to pay its 37 salaried employees and seven hourly employees, according to court papers. Bishop Stephen E. Blaire said that the diocese, which filed for bankruptcy Jan. 15, has spent $14 million in legal settlements and judgments over the past 20 years as it dealt with abuse allegations, and doesn't have funds available to settle pending lawsuits or address allegations in the future. In all, the diocese estimated its total liabilities at between $10 million and $50 million, according to its bankruptcy petition.

Hibu Inc., the publisher of “Yellowbook” phone directories in the U.S., filed for bankruptcy court protection to aid the U.K. restructuring that began this month, Bloomberg News reported yesterday. The company, based in Reading, England, owes creditors more than $1 billion, according to a chapter 15 filing that seeks to block lawsuits and organize creditors in the U.S. Hibu, which also prints yellow pages in the U.K. and Spain, began reorganizing in U.K. courts on Jan. 17 after earnings fell on competition from the Internet. Before court proceedings began, Hibu negotiated a restructuring in July that would reduce its debt by 800 million pounds ($1.3 billion) while giving lenders control of the company, formerly known as Yell. The case is In re Hibu Inc., 14-bk-70323, U.S. Bankruptcy Court, Eastern District of New York (Central Islip).

Philip Falcone’s LightSquared Inc., seeking to reorganize in bankruptcy, received loan offers from a fund owned by Fortress Investment Group LLC and an entity linked to the wireless-network company’s one-time suitor, Dish Network Corp. Chairman Charlie Ergen, Bloomberg News reported yesterday. The loan proposals are superior to one from a group of LightSquared’s lenders, Fortress Credit Investments and Ergen’s SP Special Opportunities LLC said in papers filed on Jan. 24. Their arguments are to be considered at a Jan. 31 hearing.