%1

A U.S. Supreme Court justice on Saturday night denied a last-ditch effort by a group of consumers and travel agents to stop the merger of American Airlines and US Airways, Reuters reported yesterday. The application was denied by Justice Ruth Bader Ginsburg, the court's public information office said. The combination of American's parent, AMR Corp, and US Airways Group would create the world's largest carrier and follow last month's resolution of antitrust objections by the U.S. Department of Justice. In their appeal to the Supreme Court, plaintiffs led by California resident Carolyn Fjord warned that "irreparable injury" could be caused to the domestic airline industry if the deal goes ahead as planned. They fear the merger will drive air travel prices up and service down and make planes more crowded. The merger is expected to be consummated before the opening of U.S. securities markets today. A federal judge on Friday rejected the previous attempt by the group to stop the merger.

The fight over defunct Nortel Networks' $7.5 billion in cash will be decided in joint U.S.-Canadian court hearings and not in arbitration, a U.S. appeals court ruled on Friday, Reuters reported on Saturday. The U.S. Court of Appeals for the Third Circuit upheld a bankruptcy court ruling in March that there was never an agreement to use arbitration to divide the pile of cash among various Nortel estates around the world. Nortel sought protection from creditors in courts around the world in 2009 and its businesses were quickly sold, reducing a once-global corporate giant to little more than a pile of cash. But it was never decided how to allocate the money raised between different insolvency and bankruptcy proceedings in different countries. An agreement governing the money refers to undefined "dispute resolvers" that Nortel's European estates argued was arbitration. The U.S. Bankruptcy Court in Wilmington, Del. disagreed, and the Court of Appeals affirmed that ruling.

Cerberus Capital Management is poised to take charter airline operator Global Aviation Holdings Inc. out of its second chapter 11 case in as many years, subject to higher bids at auction, Dow Jones Daily Bankruptcy Review reported today. A Cerberus affiliate is offering to sponsor Global Aviation's plan to pay its creditors and exit bankruptcy proceedings in exchange for which the buyout firm would own the restructured company, according to court papers filed on Tuesday.

Atari Inc., the company that helped give birth to the modern-day videogame industry with the introduction of now-classic games such as Asteroids and Pong, received court approval of its plan to exit bankruptcy under the control of its French parent Atari S.A., the Wall Street Journal reported today. Bankruptcy Judge James Peck confirmed the bankruptcy-exit strategy proposed by Atari that is based on a $3.4 million cash contribution plus an additional $1.75 million when Atari exits bankruptcy from parent company Atari S.A. Bankruptcy lender Alden Global Capital will be paid in full the $3.8 million it is owed. Atari will use its remaining cash to pay up to $560,000 to unsecured creditors when it leaves bankruptcy, another $560,000 a year after that and $630,000 the following year.

Bankruptcy Judge Mary Walrath approved the $40.8 million sale of golf retailer Edwin Watts to a duo of purchasers who could keep some of its 91 stores open, the Wall Street Journal reported today. After a court hearing yesterday, Judge Walrath cleared GWNE Inc., an affiliate of Worldwide Golf Shops, and liquidator Hilco Merchant Resources LLC to take over the chain after the buyers teamed up to win a bankruptcy auction earlier this week. The company hasn't said publicly how many stores will remain open, but court papers show that the purchasers plan to keep lease agreements at 49 locations.

Advantage Rent a Car, which is going on the auction block next week, on Tuesday received the bankruptcy court's final blessing for a $36 million bankruptcy loan from its would-be buyer, Catalyst Capital Group Inc., the Wall Street Journal reported today. Court papers show that Bankruptcy Judge Edward Ellington on Tuesday granted final approval to a loan that is meant to see the car-rental company through its chapter 11 case and sale. While the official loan amount is $36 million, it can be increased to $46 million if Advantage and Catalyst so choose. The loan puts Catalyst, a Canadian private-equity firm, in a prime position to acquire Advantage Rent a Car through a process overseen by the bankruptcy court. Catalyst will lead off the bidding at Monday's auction with its offer to forgive the full amount of the loan in exchange for the assets instead of paying cash.

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said that the Bankruptcy Code should be changed to accommodate the failure of a large financial firm, which he said was preferable to the federal government rescue of a cratering bank, the Wall Street Journal reported today. Lacker, in testimony at a House Judiciary Committee hearing yesterday, said that improving the Code would strengthen the financial system by reducing the chance of a government rescue and, in turn, imposing more discipline on financial firms and their creditors. Ensuring large financial firms have a credible bankruptcy path, and minimizing the chance of government support, could also help reduce reliance on potentially volatile short-term funding since creditors and firms would be less willing to take such risk, Lacker said. (Subscription required.)
http://online.wsj.com/news/articles/SB100014240527023043551045792360501…

To read the prepared hearing testimony, please click here.

FirstBank Puerto Rico asked a court to dismiss a bankruptcy case filed by the owner of a luxury Caribbean island resort, saying that it is interfering with an ongoing effort to collect the more than $120 million it is owed, Dow Jones Daily Bankruptcy Review reported today. FirstBank on Friday filed papers urging a Florida bankruptcy judge to dismiss the chapter 11 case of Scrub Island Development Group Ltd., which was filed days after a Caribbean court appointed a receiver to take over the company's 230-acre private island and its amenity-stocked resort. The bankruptcy filing stopped that court action, a move that FirstBank says shouldn't be allowed to go forward.

Atlantic Express Transportation Corp. yesterday received the bankruptcy court's approval of $53.5 million in bankruptcy financing, Dow Jones Newswires reported yesterday. Bankruptcy Judge Sean Lane said yesterday that it's clear Atlantic Express is unable to secure financing on better terms than those being provided by Wells Fargo Bank and that without this financing, the company would have to cease operations. Previously, Judge Lane granted the company access to $10 million of this loan provided by Wells Fargo Bank on an interim basis. The approval yesterday guarantees Atlantic Express's ability to tap the full amount of the loan, which matures Jan. 15.

Bankruptcy Chief Judge Mary Gorman (C.D. Ill.) has denied the bankruptcy petitions of Jeff Parsons and THR after trustees in the cases accused Parsons of attempting to hide millions in cash and assets, the Springfield (Ill.) Journal-Register reported on Friday. In effect, according to bankruptcy experts, Parsons and THR would remain liable for hundreds of millions of dollars’ worth of debt listed in the original bankruptcy petitions filed in September 2012. Denial of a bankruptcy petition is unusual, said John Penn, a Dallas attorney who serves as an expert for the American Bankruptcy Institute. “Imagine going in for surgery to fix an ailment,” Penn says. “You have the surgery and are recovering, but you still have the same ailment. That’s what this judgment is.” The Nov. 14 ruling can be appealed, though an appeal had not been filed as of last week, according to court records.