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A bankruptcy judge approved a preliminary plan to bring a long-stalled Hawaii resort development out of bankruptcy under the control of an investment group that includes the chairman of retailer Wal-Mart Stores Inc., Dow Jones Newswires reported yesterday. Bankruptcy Judge Robert Faris on Friday signed off on the disclosure document for the developer of the Hokuli'a project on Hawaii's Big Island. The Hokuli'a project is a partnership between William A. Pope, the owner of California real estate investment firm SunChase Holdings, and S. Robson Walton, Wal-Mart's chairman. The chapter 11 plan, backed by $65 million in exit financing from a SunChase affiliate, would bring the real estate project, long dogged by legal challenges and financial woes, out of bankruptcy.

OnCure Holdings Inc. received bankruptcy court approval of its bankruptcy-exit plan, which pays bondholders with proceeds from a $125 million sale of the company's assets, Dow Jones Newswires reported on Friday. Bankruptcy Judge Kevin Gross approved the plan on Thursday, essentially concluding OnCure's chapter 11 case. OnCure's bankruptcy-exit plan pays bondholders, owed more than $205.5 million, with $42.5 million in cash and $82.5 million in new notes generated from a sale of OnCure's assets to Radiation Therapy Services Holdings Inc. A lender owed $15 million is being paid in full. Unsecured creditors and OnCure's equity owner Genstar Capital LLC are seeing their interests wiped out.

U.S. District Judge Rudolph T. Randa on Tuesday refused to recuse himself from a lawsuit involving the Archdiocese of Milwaukee's cemetery trust, calling the motion requesting that he do so a waste of time and judicial resources, the Milwaukee Journal Sentinel reported today. "The Seventh Circuit, if not the Supreme Court, will be the final word on the issues raised by the Cemetery Trust litigation," Randa said in the order explaining his decision. "The last thing this case needs is another decision by another lower court federal judge before it reaches the Seventh Circuit." Randa's decision, in a lawsuit related to the Archdiocese of Milwaukee's bankruptcy, is in some ways moot. The case has already been sent to the Seventh Circuit for review. At issue in the lawsuit is whether $50 million or more held by the archdiocese in the cemetery trust can be used to fund settlements with sex abuse victims who have filed claims in the archdiocese's bankruptcy. Randa ruled in August that tapping any of that trust would substantially burden the archdiocese's free exercise of religion under the First Amendment and a 1993 law aimed at protecting religious freedom. Lawyers for the creditors committee argued Randa had a financial interest in the bankruptcy because he had purchased his parents' crypts. Randa rejected that argument on Tuesday.

The Public Utilities Commission of Ohio voted on Wednesday to approve Ormet Corp.'s revised power deal with energy supplier American Electric Power Co Inc., saving the U.S. aluminum producer from likely closure, Reuters reported yesterday. The commission added, however, that it was modifying parts of Hannibal, Ohio-based Ormet's request for a unique subsidized power arrangement, as it works to emerge from bankruptcy, which Ormet filed for in February. Cutting the high cost of energy to run its 270,000-tonne-per-year aluminum smelter was the final hurdle on the path to emerging from bankruptcy.

Cloud storage company Nirvanix Inc. on Tuesday filed for chapter 11 protection, the culmination of a startling flop for what was once seen as a high-flier among cloud startups, the Wall Street Journal reported yesterday. The filing comes on the heels of a notice the company posted on its website last week saying that it was working with International Business Machines Corp. to either return customers’ data or help them move it to another cloud storage provider and would try to be available through October 15. Nirvanix had raised more than $70 million in venture capital since its founding in 2007, according to VentureWire records. In May 2012 after the last funding round, which was $25 million, former Chief Executive Scott Genereux told VentureWire that Nirvanix was growing and headed toward profitability and a possible IPO. Its largest equity holders are Khosla Ventures and TriplePoint Capital, which may provide debtor-in-possession financing to keep the company running, according to the bankruptcy filing. The company reported assets of between $10 million and $50 million and liabilities in that same range, according to the filing.

Major U.S. honey supplier Groeb Farms Inc. filed for chapter 11 protection on Tuesday after it was caught illegally buying Chinese honey through other countries to avoid antidumping tariffs imposed by U.S. trade regulators in 2001, the Wall Street Journal reported today. Executives placed the 76-worker company under chapter 11 protection saying that its $2 million settlement with regulators required it "to dispose of any and all Chinese-origin honey in its possession." Company lawyers have filed a reorganization plan that details how the company would hand over ownership to a Texas private equity firm that, in exchange, would forgive at least $27 million worth of debt.

The U.S. Department of Justice, fighting a proposed merger of US Airways Group Inc. and American Airlines parent AMR Corp., lost a bid to delay the case yesterday, Reuters reported yesterday. The Justice Department requested a delay after many of its attorneys and support staff were placed on furlough. Judge Colleen Kollar-Kotelly, however, turned down the request in an order issued on Tuesday. Texas Attorney General Greg Abbott also announced that his state was dropping out of a U.S. Justice Department lawsuit seeking to block the merger, Reuters reported yesterday. Texas was one of several states that joined the Justice Department lawsuit, filed in August, that has sought to stop a deal it said would lead to higher airfares and less competition. The other states are Arizona, Florida, Michigan, Pennsylvania, Tennessee, Virginia. The District of Columbia also opposes the deal.

British retailer Tesco PLC's U.S. grocery chain, Fresh & Easy Neighborhood Market, is pushing for a sale by Thanksgiving, probably to Yucaipa Cos., the investing company that helped fund Great Atlantic & Pacific Tea Co.'s exit from bankruptcy, Dow Jones Daily Bankruptcy Review reported today. Yucaipa was chosen to lead the bidding on the grocery chain after a nine-month marketing process in advance of Monday's bankruptcy filing.

U.S. bankruptcy courts remain open for business, but the government shutdown leaves them far from full strength as only one third of the employees from the U.S. Trustee Program are considered "essential workers" who are required to work through the shutdown, the Wall Street Journal reported yesterday. The other 780 employees have been furloughed. The courts remain open and continue to hold hearings and approve motions, but Congress’s inability to break the stalemate that shut down the government could cause slowdowns in some ongoing chapter 11 cases.

The U.S. Supreme Court agreed yesterday to consider whether severance pay to workers laid off involuntarily is subject to federal payroll tax in a case the Obama administration has warned could affect $1 billion in tax refund claims, Reuters reported yesterday. The dispute, which pits defunct rural retailer Quality Stores Inc. against the U.S. Internal Revenue Service, involves the Federal Insurance Contributions Act tax (FICA). The tax helps finance two major social programs, Social Security retirement pensions and Medicare health insurance for the aged. FICA taxes are paid in part by the employer and in part by the employee, whose share is normally withheld from paychecks. The case before the Court involves midwest-based Quality Stores, which served mainly farmers and rural people. It went bankrupt in 2001 and closed all 300 of its stores. Thousands of workers were laid off and received severance pay, on which the company paid and withheld FICA taxes. The company in 2002 claimed an IRS refund for just over $1 million in FICA taxes, roughly half paid by the company and half withheld from the severance pay. The retailer argued that severance pay should not be subject to FICA taxes. The IRS thought otherwise, saying severance pay, like any other wage, is taxable for FICA purposes.