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Capitol Bancorp Ltd. won more time to control its chapter 11 case, which is dragging on as the company waits for the regulatory approval it needs to firm up an equity infusion, Dow Jones DBR Small Cap reported Friday. Judge Marci B. McIvor of the U.S. Bankruptcy Court in Detroit approved on Thursday the bank-holding company's request to extend its exclusivity period, during which creditors are barred from introducing rival bankruptcy-exit plans. The Michigan-based company now has until March 7 to keep the reins in its chapter 11 case. Capitol Bancorp in October secured the $50 million investment it needs from ValStone Partners LLC. But as part of its agreement with ValStone, Capitol Bancorp agreed to reimburse the investor for its due-diligence costs, in a payment that required the approval of the U.S. Federal Deposit Insurance Corp. Capitol Bancorp filed for chapter 11 protection in August with a plan already in hand to restructure by swapping $158.1 million in debt for equity in the reorganized company.

Thursday marked the one-year anniversary of a significant milestone in Lehman Brothers' bankruptcy case: court approval of its $65 billion creditor-payment plan. But the judge's signature didn't close the book on its chapter 11 case: Lehman still winding down its holdings, settling claims and mailing checks to creditors. And Lehman will forever be tied to the recession, making it an essential case study for future business and economic students, according to an analysis in Friday's Wall Street Journal blog. The first place those students will turn will be the 2,200-page report issued in early 2010 by Anton Valukas, the court-appointed examiner given the gargantuan task of untangling the confusing web of Lehman and its many affiliates and transactions that spanned the globe. Valukas's report told the world what went wrong with Lehman and why, performing a public-service role that's not legally required but that has come to be at the heart of what bankruptcy examiners do. "It really explained how and why this happened and gave you a sense of where it was that our financial system was failing in terms of protecting investors and protecting the community," Valukas said Friday. "Once you know that, it might be of assistance in figuring out how you prevent it from happening again." To that end, Valukas's report identified what his team saw as the oversight failures of the federal government, which prompted new securities and accounting rules and regulations. He also cited the report's influence on the Dodd-Frank legislation, which he said "simply added evidence" to support financial reform.

Struggling Ampal-American Israel Corp. filed a bankruptcy-exit plan that gives frustrated bondholders an ownership stake in the reorganized foreign energy and transportation investment company but also protects the shares held by Chief Executive Yosef Maiman, Dow Jones DBR Small Cap reported today. Ampal-American's plan proposes to split 20 percent of the company's Class A stock and 184,651 shares of "voting preference common stock" among bondholders owed about $233 million and other unsecured creditors. At a hearing Thursday in the U.S. Bankruptcy Court in Manhattan, Judge Stuart Bernstein gave the company's committee of unsecured creditors 10 days to file a competing plan. Both plans will be discussed at a Dec. 20 hearing. In earlier court papers, bondholders had argued that the court should either appoint a chapter 11 trustee or end the company's exclusive right to file a bankruptcy-exit plan so that they could propose their own.

The California Public Employees’ Retirement System (CalPERS) is seeking to sue bankrupt San Bernardino over missed pension payments, the second potentially precedent-setting fight the fund picked with a California city this year, Bloomberg News reported yesterday. San Bernardino cannot use the Bankruptcy Code to justify its failure to make at least $5 million in payments, CalPERS, the biggest U.S. public-employee pension fund, said in court papers filed yesterday. The motion relies on arguments the fund is also making in the bankruptcy of Stockton, Calif.

A group of some of bankrupt American Airlines' most significant bondholders said that it will not support a standalone restructuring unless a new board is brought in, a move that may increase hurdles for Chief Executive Tom Horton and his team, Reuters reported today. The 12-member bondholder group, which includes JPMorgan Chase & Co, Pentwater Capital Management and York Capital Management, is the primary group to have expressed an interest in funding an independent exit for the airline's parent company AMR Corp. AMR's current management team, led by Horton who is also chairman of the board, has lost the confidence of the company's unions, which support a takeover bid by smaller competitor US Airways Group. The bondholders, who hold more than $700 million in AMR debt, said in the letter to Keith Wilson, president of American's pilots' union, that its support for an independent exit was "conditioned, among other things, on that plan providing for the naming of a new board of directors."

Power-plant operator LSP Energy is seeking a 30-day extension to file its plan to repay creditors after an outage stalled its plan to sell its Mississippi gas-fired power plant, Dow Jones DBR Small Cap reported on Friday. In court papers filed on Nov. 20, the company asked to keep exclusive control over its chapter 11 case through Dec. 21 as it works to gets its power plant back online and negotiates an amendment to its deal to sell the plant to South Mississippi Electric Power Association.

Negotiators for Alabama's bankrupt Jefferson County and Wall Street creditors are making modest headway but still have a long way to go before reaching a deal to end America's biggest municipal bankruptcy, county leaders said on Friday, Reuters reported. After meeting creditors of the county's sewer system, Jefferson County Commission President David Carrington and Commissioner Jimmie Stephens gave no details but said that more negotiating sessions were expected in New York in early December. Home to Birmingham, Ala.'s biggest city, Jefferson County on Nov. 9, 2011, filed a $4.23 billion chapter 9 bankruptcy caused mainly by more than $3 billion of soured sewer system debt, political corruption and the loss of a local jobs tax worth about $60 million a year.

AMR Corp. Chief Executive Tom Horton yesterday told creditors that a merger with rival US Airways Group Inc. would need to result in creditors receiving the lion's share of equity in a combined airline for a deal to proceed, the Wall Street Journalreported today. His remarks indicate the two companies are moving closer to a possible agreement on a merger, even as AMR pursues its own plan from emerging from bankruptcy proceedings as an independent airline. Horton made the comments as part of an update on merger discussions during a gathering of the airline's official creditors committee. While not spending too much time on specific figures, Horton made it clear that American, the No. 3 U.S. airline by traffic, expects its creditors to receive more than 70 percent of the shares of a combined airline.

A group of creditors owed millions of dollars by Dewey & LeBoeuf LLP is seeking to sue its former top three managers, saying that the trio "engaged in rampant self-dealing" that led to the law firm's demise, the Wall Street Journal reported today. The move comes from the company's unsecured creditors' committee—staffing agencies, car services and other trade creditors that extended credit to Dewey. Those unsecured creditors, which also include federal pension regulators, have filed up to $500 million in claims against the failed law firm and are unlikely to recover all the money they are owed. The request to pursue claims against Dewey's former leaders, filed on Monday, seeks to recover money from about $50 million in management-liability coverage and other insurance policies held by the law firm. A hearing on the unsecured creditors' motion is set for Nov. 29.

The primary industry group for the corporate loan market warned that any attempt to limit the rights of secured creditors in the event of a bankruptcy could have a broader impact on companies' access to and cost of capital, the Wall Street Journal's CFO Journal reported today. The comments by the Loan Syndications and Trading Association (LSTA) were aimed at the American Bankruptcy Institute's Chapter 11 Commission, which is currently studying the 1978 bankruptcy code for areas in need of updating. The LSTA's general counsel Elliot Ganz announced the formation of a working group on the ABI's review that any attempt to limit secured creditors' rights could limit companies' access to capital both before and after bankruptcy, because lenders will feel less protected. Robert Keach, co-chair of the ABI Chapter 11 Commission, said that the Commission has so far only identified the role of secured debt in bankruptcies as an area of study and hasn’t taken any position on the issue. "The ABI commission is certainly not looking at the prevalence of secured debt that’s occurred over the last 30 years as a problem to be solved," he said. "We mentioned it in the mission statement because there have been changes that have occurred over time that have made the current Code somewhat obsolete."

The next hearing of ABI's Chapter 11 Commission will be on Thursday, Nov. 15, at the CFA Annual Convention in Phoenix. For more information on the public hearing schedule and the work of the Commission, please click here: http://commission.abi.org/