%1

American Airlines parent AMR Corp. won bankruptcy court approval of the deal it reached with regulators to complete its $17.2 billion merger with US Airways Group Inc. and create the world’s biggest airline, Bloomberg News reported on Thursday. The accord with the U.S. Justice Department, which agreed on Nov. 12 to drop its antitrust challenge if the carriers gave up some airport slots, was approved today by U.S. Bankruptcy Judge Sean Lane. “The settlement easily satisfies” bankruptcy requirements and the merger may be consummated without delay, Judge Lane said at a hearing. A group that sued to block the deal “utterly failed” to prove the merger would harm them, he said. AMR, based in Fort Worth, Texas, intends to complete the merger on Dec. 9 and rename the company American Airlines Group Inc. The last day of trading of all outstanding securities of AMR and the common stock of US Airways will be Dec. 6, according to a company statement.

A federal judge approved Residential Capital LLC's settlement with the Federal Housing Finance Agency, resolving billions of dollars in claims tied to mortgage-backed securities sold to mortgage finance firms Fannie Mae and Freddie Mac during the financial crisis, the Wall Street Journal reported on Friday. Bankruptcy Judge Martin Glenn on Tuesday signed off on ResCap's settlement with FHFA, the government overseer of Fannie and Freddie. The agreement is an ancillary pact tied to a settlement the housing regulator struck last month with ResCap's parent, the government-backed auto lender Ally Financial Inc. Under the deal, FHFA will receive a $1.2 billion claim against ResCap's bankruptcy estate and will retain some of its mortgage-related claims against Ally. Under ResCap's restructuring plan, most unsecured creditors would receive around 35 cents on the dollar, though specific recoveries depend upon whether ResCap or one of its affiliates actually owes the money. FHFA will also receive $24 million in cash when the subprime mortgage lender exits bankruptcy.

The U.S. Supreme Court will hear a dispute in the bankruptcy of a small-town pizza shop owner, taking on a case that could dictate how inherited individual retirement accounts are treated in bankruptcy, Reuters reported yesterday. The Supreme Court said yesterday that it would hear arguments in Clark v. Rameker in a fight over whether Heidi Heffron-Clark and her husband, Brandon Clark, can keep creditors from going after $300,000 in an IRA inherited from Heffron-Clark's late mother. The Clarks declared bankruptcy in 2010 after the pizza shop they opened in their home town of Soughton, Wis., fell victim to economic hardship, said Michael Murphy, the couple's lawyer. The Clarks owed about $700,000 to their landlord, mortgage lenders, trade creditors and others, Murphy said. That means the roughly $300,000 in the IRA could make a big difference in overall creditor recoveries. William Rameker, the trustee in charge of administering the couple's bankruptcy estate, took the position that the IRA was fair game for creditors, but the Clarks argued that it was exempt under bankruptcy laws, which generally protect retirement funds. After an initial victory for Rameker was reversed by a district court, the matter went before a three-judge panel in the 7th Circuit U.S. Court of Appeals. In an April opinion written by Chief Judge Frank Easterbrook, the panel sided with Rameker, saying creditors could access the inherited IRA. Easterbrook held that while bankruptcy laws exempt retirement funds from creditor claims, IRAs cease to be "retirement funds" when inherited from a deceased owner. Under existing law, distributions under an inherited IRA must begin within a year of the prior owner's death and finish within five years. The ruling clashes with decisions in both the Fifth and Eighth Circuits, where judges have held that IRAs do not cease to be retirement funds when they change hands.

GateHouse Media Inc. has emerged from a pre-packaged chapter 11 bankruptcy, the Quincy (Mass.) Patriot Ledger reported today. GateHouse filed for chapter 11 on Sept. 27 with the unanimous support of its lenders to restructure $1.2 billion of debt that was scheduled to come due in August 2014. GateHouse is now owned by New Media Investment Group Inc. and is under common ownership with Local Media Group, the newspaper group that operates eight daily community newspapers and 13 weeklies. GateHouse, headquartered in Fairport, N.Y., is one of the largest publishers of locally based print and online media in the United States as measured by its 78 daily publications.

Dish Network Inc. shareholders are asking a Nevada judge to exclude the company’s chairman and controlling shareholder, Charlie Ergen, from the bankruptcy court auction of LightSquared Inc., Bloomberg News reported yesterday. Ergen, who privately bought $1 billion in LightSquared debt, has a conflict of interest, and Dish’s $2.22 billion bid for LightSquared’s wireless spectrum should be overseen by an independent committee, lawyers for the shareholders argued at a hearing yesterday. The Jacksonville Police and Fire Pension Fund said in a complaint brought on behalf of the satellite-television provider against the board of directors that Ergen’s private purchase of LightSquared’s debt conflicts with Dish’s strategic interests in the company’s assets, and that a “corporate governance breakdown” at the company had ensued. The pension fund said that Dish had created a two-person special committee to protect it from a “blatant conflict of interest” between the company, which seeks to buy spectrum as part of its business strategy, and Ergen, who “secretly made himself LightSquared’s largest creditor” by buying its debt from around the time of its bankruptcy filing in May 2012.

The parent company of American Airlines yesterday asked a bankruptcy court to approve a settlement with U.S. regulators that would allow it to merge with rival US Airways Group and create the world's largest airline, Reuters reported yesterday. Stephen Karotkin, a lawyer for AMR Corp, said that the settlement resolving the U.S. Justice Department's antitrust objections was not opposed by any of the company's creditors. The only opposition came from a group of consumers who had sued the airlines in a separate case alleging that the merger would lead to higher prices, more crowded planes and more expensive in-flight amenities. The group sought a temporary restraining order blocking the plan from going into effect.

Ron Burkle's Yucaipa Cos. won court approval on Friday to take over about 150 Fresh & Easy Neighborhood Market stores, salvaging most of Tesco Plc's U.S. grocery-chain venture, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Kevin Carey signed off on the deal, which is being financed by the British retailer with a $120 million loan, part of an agreement struck before Tesco put Fresh & Easy under chapter 11 protection.

Furniture Brands International Inc., the maker of Broyhill, Lane and Thomasville home furnishings, won court approval to sell almost all its assets to KPS Capital Partners LP for $280 million, Bloomberg News reported on Saturday. Bankruptcy Judge Christopher Sontchi granted approval of the sale at a hearing today in Wilmington, Delaware, overruling an objection from a shareholder that said a truncated sales process prevented Samson Holding Ltd. from making a competing bid. The furniture maker last week canceled its bankruptcy auction after saying it received no other qualified bids to challenge KPS. The New York-based private-equity firm should close the sale by today.

The U.S. Department of Justice's bankruptcy watchdog on Friday questioned the feasibility of four competing restructuring plans for bankrupt LightSquared put forth by the company and its creditors, Reuters reported on Friday. The U.S. Trustee Program said that the plans would provide third parties with overly broad releases from potential legal claims. LightSquared, in bankruptcy since 2012, is fighting to keep control of its valuable spectrum amid a takeover push by Dish Network Corp. Three creditor groups have proposed plans that contemplate an auction for the assets, and Dish has already made a baseline bid of $2.2 billion. A fourth plan, proposed by LightSquared's majority owner, Phil Falcone's Harbinger Capital Partners, would restructure the company without an auction, with Harbinger maintaining control. The Trustee's office said that the restructuring plans could be read to protect third parties from claims related to criminal conduct and professional malpractice, even though they exclude fraud and gross negligence claims from the releases. The objection will be considered at a hearing on December 10 in Manhattan bankruptcy court.

Fisker Automotive Inc., whose $103,000 luxury hybrid car was driven by celebrities including Justin Bieber and Leonardo DiCaprio, filed for bankruptcy with plans to sell itself to Hybrid Tech Holdings LLC, Bloomberg News reported on Friday. The Anaheim, Calif.-based company listed assets of as much as $500 million and debt of as much as $1 billion in a chapter 11 petition filed yesterday in bankruptcy court. Assets include a shuttered General Motors Co. factory in Wilmington that Fisker had planned to reopen. Safety recalls, a battery supplier that went bankrupt and shipments lost to Hurricane Sandy all contributed to the company’s financial woes, Henrik Fisker, the auto designer who co-founded the company, told Congress in a hearing April 24. A House Oversight and Government Reform subcommittee scrutinized a $529 million federal loan granted to Fisker in 2009, questioning why the government had made it in the first place and what the company would do to repay taxpayers. Fisker missed its first payment on the low-interest U.S. loan on April 22. It had drawn about $193 million of the loan before being cut off by the U.S. Energy Department for missing milestones.