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The team winding down the remnants of Lehman Brothers Holdings Inc. has reached a far-ranging settlement resolving Fannie Mae’s $18.9 billion claim stemming from mortgage loans and mortgage-backed securities the failed investment bank sold to Fannie Mae before the financial crisis, the Wall Street Journal reported today. Lehman said yesterday that Fannie Mae would receive a general unsecured claim of $2.15 billion against its holding company’s estate. Under Lehman’s chapter 11 payment plan, Fannie would recover about 25 cents on the dollar, or about $537.5 million. In return Lehman resolves its long-running dispute with the government-backed housing giant, which had argued Lehman was on the hook for the loans, and frees up $5 billion for creditors. A bankruptcy judge had ordered Lehman to set that amount aside pending the outcome of the Fannie dispute when he approved the bank’s chapter 11 plan. In court papers, a Lehman attorney said the settlement, which requires court approval, will allow the estate to dole out an additional $400 million as part of its fifth distribution to creditors. Lehman’s New York-based holding company has already paid creditors nearly $50 billion since it officially exited bankruptcy protection in March 2012. That figure is expected to grow to more than $80 billion, Lehman said earlier this summer.

Battery startup Xtreme Power based in Lyle, Texas, filed for chapter 11 protection on Thursday, GreenTechMedia.com reported today. Xtreme plans to “continue its operations at all locations as it begins a process to identify an acquirer,” according to the company, with general creditors providing financing. The company's core engineering, project development and operations staff will remain in place during this process. CEO Alan Gotcher stated that the bankruptcy filing has been “structured to allow one of the company's creditors to file a stalking-horse bid” if competing bids don't emerge by the end of February. He added that Xtreme has a pipeline of business in excess of $100 million and letters of intent for another $65 million of new business, and projects earnings before interest, taxes, depreciation and amortization would reach break-even later this year.

Bankruptcy Judge Ronald Pearson on Tuesday approved a loan of as much as $5 million to help Freedom Industries pay for cleaning up the spill site and other remediation expenses that are the result of the Jan. 9, 2014 chemical leak into the Elk River, WOWKTV.com reported yesterday. Freedom Industries' Chief Financial Officer, Terry Cline, testified during the hearing that he had spoken on Jan. 20 with Diversified Services, which is serving as a subcontractor on the cleanup and remediation process, that Freedom Industries will owe Diversified between $700,000 and $800,000. Cline said that Freedom Industries has paid $300,000 of that amount to date. Cline testified during the hearing that Freedom Industries needed to have the situation under control before he could do payroll for its 51 employees yesterday. He said that Freedom Industries had $6 million in accounts payable at the time of the chemical leak Jan. 9.

Frego & Associates, led by attorney James Frego, has filed for chapter 11 protection, blaming its financial problems on payments owed to Frego’s former firm, which has shut down, the Wall Street Journal reported today. Frego, based in Dearborn Heights, Mich., plans to continue filing about 100 chapter 7 or chapter 13 bankruptcy cases each month for clients while the firm’s leaders use bankruptcy to negotiate lower payments to be paid to the former law firm’s estate. The receiver who was put in charge of shutting down that old firm is eying customer payments that followed Frego to his new firm but originated in the old firm. He’s pushing Frego’s new law firm to pay about $220,000, according to court papers filed in U.S Bankruptcy Court in Detroit.

Some of Bernard Madoff’s victims won permission to appeal a bankruptcy ruling directly to a federal appeals court that barred them from using the length of time they invested with the con man to add interest to their claims, Bloomberg News reported yesterday. The victims “satisfied the criteria” for a direct appeal that skips over the district court, where bankruptcy appeals usually go first, the U.S. Court of Appeals in New York ruled today. A hearing date wasn’t set. The victims seek a larger share of about $1.4 billion in cash reserves set aside for the dispute by Irving Picard, the trustee liquidating Madoff’s firm to repay thousands of investors who lost $17 billion in principal when the world’s biggest Ponzi scheme collapsed on Dec. 11, 2008.

Dots LLC, the 400-store clothing chain for young women, filed for bankruptcy protection, blaming prior management, the economy and leases that cost too much, Bloomberg News reported yesterday. The company, founded 27 years ago outside Cleveland, has arranged to borrow $36 million to keep operating as it reorganizes under chapter 11 protection and implements a new merchandising strategy. In October, vendors began demanding Dots pay for new goods faster than the company could afford, “causing significant liquidity challenges,” Chief Executive Officer Lisa Rhodes said in a court affidavit filed yesterday. For the 12 months ending Jan. 31, the company had about $293.7 million in sales, Rhodes said. That’s down from $338.8 million in the previous 12 months and $346.2 million the year before that.

ATI Enterprises Inc., the for-profit school that agreed to pay the U.S. $3.7 million over allegations it submitted false claims for student financial aid, filed to liquidate, Bloomberg News reported yesterday. The New York-based company, doing business as ATI Career Training Center, listed debt of as much as $500 million and assets of less than $50,000 in chapter 7 papers filed yesterday. Four affiliates also sought court protection. ATI once ran a chain of more than 20 vocational schools with more than 15,000 students in Texas, Oklahoma, New Mexico and Florida that have since shut down. Whistleblowers sued in 2009 and 2011 accusing the company of committing fraud in its enrollment practices.

Plextronics, the venture-backed Pittsburgh company that is developing electronic inks designed for use in organic LED televisions and lighting applications, has filed chapter 11 protection, Optics.org reported yesterday. Despite the bankruptcy application, Plextronics said that it had filed a series of customary motions to ensure the continuation of normal operations during the process, and stressed that its “Plexcore” products would remain available. According to the company’s most recent filing with the Securities and Exchange Commission, which dates from October 2013, Plextronics had been seeking to raise $5 million in debt-based securities. But at the time of that filing, only $572,000 had been raised. In its chapter 11 petition filed on Jan. 16, the company estimated that it had liabilities of between $10 million and $50 million.

A U.S. Bankruptcy Court judge ruled on Friday that a Chinese auto parts maker and a Hong Kong businessman will square off in an auction for Fisker Automotive, the defunct maker of a plug-in hybrid sports car, Reuters reported on Friday. The Feb. 12 auction will pit the U.S. unit of China's Wanxiang Group against Hybrid Tech Holdings, a company affiliated with investor Richard Li of Hong Kong. Hybrid has said its initial bid would be worth $55 million. Fisker's committee of unsecured creditors has said it hopes to find other potential buyers by the Feb. 7 bid deadline.

Bombarded by lawsuits and under federal investigation, the chemical company that spilled a dangerous solvent into a West Virginia river and fouled the drinking water of 300,000 people filed for chapter 11 protection Friday, the Los Angeles Times reported on Saturday. Freedom Industries Inc., owner of a storage tank that ruptured Jan. 9 and spilled 7,500 gallons of a coal-treatment foaming agent called MCHM into the Elk River, sought protection from creditors under a chapter 11 filing by its parent company, Chemstream Holdings Inc. of Pennsylvania. The spill prompted the governor to order residents of nine counties in the Charleston area not to use tap water for anything but flushing toilets. In court documents, Freedom Industries says a water line break brought on by frigid temperatures may have caused "an object piercing upwards" to punch a hole in the 35,000-gallon storage tank, allowing the chemical to flow down an embankment into the river. In the filing, Freedom estimates its total liabilities and total assets at between $1 million and $10 million each. The company was founded in 1992, but has existed in its current form only since Dec. 31, when it merged with three other companies under the Freedom Industries name.