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Bankruptcy Judge Sean Lane yesterday hinted that he would approve AMR Corp.'s bankruptcy exit plan despite the government's challenge to its main component: AMR's planned megamerger with US Airways Group Inc., Reuters reported yesterday At a hearing yesterday, Judge Lane held off on confirming the plan for American Airlines' bankrupt parent, but said that he found "arguments in favor of confirmation to be fairly persuasive." In a lawsuit filed on Aug. 13, the U.S. Department of Justice sought to block the merger on antitrust grounds, alleging it would create too much consolidation and lead to higher fares for consumers. At an initial hearing on Aug. 15, Judge Lane voiced hesitation to give his blessing to a plan that might change later, namely through a settlement with the DOJ that could include divestitures.

Bankruptcy Judge Allan Gropper yesterday confirmed K-V Pharmaceutical Co.'s chapter 11 restructuring plan, which is based on a $275 million investment deal with a group of its junior bondholders, Dow Jones Daily Bankruptcy Review reported today. Judge Gropper signed off on K-V's plan after he issued a ruling Tuesday denying $32 million in interest to the company's senior bondholders, including Silver Point Capital LP.

American Roads LLC, operator of the Detroit Windsor Tunnel linking the U.S. with Canada, moved closer to shedding $830 million in debt from swaps and bonds after a judge denied a bondholder group’s bid to join the case, Bloomberg News reported yesterday. Bankruptcy Judge Burton R. Lifland ruled yesterday that an ad-hoc group of investors didn’t have legal standing in the case and therefore couldn’t object to American Roads’ proposed reorganization. Under the plan, holders of $496 million in bonds will receive nothing and ownership of the company will change hands. Judge Lifland approved the company’s disclosure, and said that he would decide later whether to approve the plan, allowing American Roads to exit court protection.

A U.S. Trustee yesterday asked a judge to convert a troubled South Dakota beef processing plant's bankruptcy to a chapter 7 liquidation, the Associated Press reported yesterday. Assistant U.S. trustee James Snyder said in a petition that he believes that Northern Beef Packers, which filed for chapter 11 bankruptcy protection last month, is "administratively insolvent" based on company reports and statements. "Based on currently available information, it appears the plant represents the only asset by which Debtor may generate funds to pay creditors," Snyder wrote. Northern Beef, based in Aberdeen, S.D., had been trying to obtain post-petition financing so it could proceed with hiring an investment banking firm to pursue a sale of the plant.

Retired U.S. Bankruptcy Court Judge Arthur J. Gonzalez, whose 2,200-plus page independent report concluded that ResCap parent Ally Financial Inc. didn't set its subsidiary up for failure as some creditors charged, said in a Friday filing that his work is done and that he would like to be relieved from his duties, Dow Jones Newswires reported yesterday. The lingering deadline for Gonzalez's report was considered a major factor in Ally's June settlement with creditors, which calls for the company to pay $2.1 billion to settle those creditors' claims. Bankruptcy Judge Martin Glenn allowed Gonzalez's report to be filed with the court confidentially at first as the sides finalized details on their settlement. In his filing on Friday, Gonzalez said that aside from being relieved, he wants the work done by himself and his hired professionals to be kept confidential and for them to be immune from future investigations regarding the report. He also said that to avoid "wasteful collateral litigation," he and his professionals shouldn't be considered liable for anything related to ResCap's chapter 11.

The rail company whose oil tanker train blew up in a Quebec town last month, killing 47 people, will be allowed to continue operating through Oct. 1 after providing insurance documentation demanded by Canadian authorities, Reuters reported on Friday. The Canadian Transportation Agency (CTA) said on Friday it would allow Montreal, Maine and Atlantic Railway (MMA) and its Canadian subsidiary keep trains moving for now. Earlier this month it had ordered MMA to cease operations, saying the railway lacked adequate insurance. On July 6, a runaway MMA train hauling tankers of crude oil derailed in the center of the tiny Quebec town of Lac-Megantic, exploding in giant fireballs in what was North America's deadliest rail accident in two decades. The CTA ordered the railway on Aug. 13 to halt operations as of Aug. 20 because it did not have adequate insurance. The insurance that MMA had in force in July will not come close to meeting the costs of cleanup and restoration after the Lac-Megantic crash.

Orchard Supply Hardware Stores Corp. is seeking court approval of a settlement the hardware and garden chain says will save it from costly legal battles with its key creditors, Dow Jones Daily Bankruptcy Review reported today. The deal promises Orchard's lenders and unsecured creditors a cut of the proceeds from the company's $205 million sale to Lowe's Cos. or other assets, avoiding a courtroom showdown over the amount of money each creditor group is entitled to receive.

Top federal judges in 49 states are urging lawmakers to avoid another round of automatic spending cuts that would have a "devastating and long-lasting impact" on the federal courts, The Associated Press reported today. The unusual letter from the chief judges of trial courts in every state but Nevada said that the $350 million reduction in the judiciary's budget for the current year has dramatically slowed court proceedings and put public safety at risk. The letter was sent this week to congressional leaders in both parties in the House and Senate.

Edison Mission Energy is looking to block its unsecured creditors from suing parent Edison International because it says that it's "ready, willing and able" to do so itself, Dow Jones Newswires reported yesterday. The official committee representing unsecured creditors in Edison Mission's chapter 11 case has sought the right to sue Edison International over its alleged "abusive domination and control" of Edison Mission. The committee claims that Edison International drained Edison Mission of hundreds of millions of dollars in value ahead of the latter's bankruptcy filing. The committee argues that Edison Mission's close ties to its parent is one of "numerous" conflicts of interest that make the subsidiary unable to pursue any litigation. But in court papers filed Wednesday, Edison Mission says that isn't true—it's been investigating possible claims against its parent for more than six months and has as a "starting point" drafted a 40-page lawsuit for which it has sought creditor input.

The U.S. Court of Appeals for the Fourth Circuit has appointed Benjamin A. Kahn and Lena M. James as federal bankruptcy judges for the Middle District of North Carolina, the Winston-Salem Journal reported today. James will succeed former Judge Thomas Waldrep and will be stationed in Winston-Salem. Kahn will succeed Judge William L. Stocks and will be stationed in Greensboro. James and Kahn will be sworn in after completing a background-check investigation. James serves as the chief deputy for the U.S. Bankruptcy Court. She had worked as a law clerk to Chief Bankruptcy Judge Catharine R. Aron and as an attorney at the law firm of Womble, Carlyle, Sandridge and Rice. Kahn is a member of the law firm of Nexsen Pruet PLLC in Greensboro, and served as law clerk to Judge Jerry G. Tart.