%1

A bankruptcy trustee and creditors grilled representatives of former Red Sox pitcher Curt Schilling's failed Rhode Island video game company at a court hearing yesterday, the Boston Globe reported today. The hearing was the first opportunity for creditors to question 38 Studios LLC executives about its financial affairs since the firm filed for chapter 7 bankruptcy last month, the first step toward the company’s eventual liquidation. Most creditors, including hundreds of workers owed back pay, are expected to receive nothing through the bankruptcy proceedings. The company estimated it owed creditors more than $150 million and had less than $22 million in assets, almost all of which are expected to go to the state of Rhode Island.

Bankruptcy Judge James Peck ruled yesterday that a group of more than 20 hedge funds and money managers can't jump ahead of creditors of Lehman Brothers Holdings Inc.'s brokerage arm in the order to be repaid, the Wall Street Journal reported yesterday. Judge Peck said that Lehman's "soft-dollar" arrangements with the money managers don't entitle them to customer status over the brokerage unit's creditors. Soft dollars are credits a brokerage gives to hedge funds and other money managers for using its services, typically for securities research. Because soft-dollar credits cannot be used like cash to buy securities, Judge Peck said, they do not qualify for enhanced customer protection under the law.

Unsecured creditors of Allied Systems Holdings Inc. say that the car hauler's proposed bankruptcy loan from private equity owner Yucaipa Cos . would "shackle the hands" of the company, Dow Jones DBR Small Cap reported today. Yucaipa, a private equity firm controlled by financier Ron Burkle, owns 70 percent of Allied's equity, holds a majority of the company's $244 million in first-lien debt and is providing at least 75 percent of the proposed $20 million bankruptcy financing.

ABI's Commission to Study the Reform of Chapter 11 has released the names of nearly 130 corporate restructuring experts who have agreed to serve on one of 13 advisory committees to examine discrete current issues. The diverse group of professionals come from the backgrounds of law, finance and the judiciary. The lists of names can be found on the Commission's website. The thirteen advisory committees/study topics are: Administrative Claims, Critical Vendors and Other Pressures on Liquidity; Avoiding Powers; Bankruptcy Remote Entities, Bankruptcy-Proofing and Public Policy; Distributional Issues Under Plans; Executory Contracts and Leases; Financial Contracts, Derivatives and Safe Harbors; Financing Chapter 11; Governance and Supervision of Chapter 11 Cases and Companies; Labor and Benefits Issues; Multiple Enterprise Cases/Issues; Plan Issues: Procedure and Structure; Role of Valuation in Chapter 11 Cases; and Sales of Substantially all of the Debtor’s Assets, Including Going Concern Sales. The Commission is working to break down each study topic further into subtopics—a process intended to help advisory committees identify all potentially relevant issues and coordinate areas of potential overlap among study topics.

The Commission has announced a schedule of fall public hearings at major insolvency conferences, where interested members of the restructuring community can appear and provide testimony to the Commission or to one or more of the advisory committees. The hearings will be held at the NCBJ annual meeting on October 26, the TMA annual convention on November 3 and the Commercial Finance Association annual meeting on November 15. Other public hearing dates will be announced.

Creditors owed more than $110 million are challenging Syms Corp. for control of its chapter 11 case, contending that the company is operating as a "front" for Chief Executive Marcy Syms in pushing an unfair bankruptcy plan, Dow Jones DBR Small Cap reported today. Creditors are seeking a July 9 hearing on their bid to propose a chapter 11 plan that would rival the company's version.

Having already examined the oral argument in a previous ABI media teleconference, panelists will reconvene for an ABI and West LegalEd Center webinar today to discuss the Supreme Court's ruling in RadLAX Gateway Hotel LLC v. Amalgamated Bank. CLE credit will be available for the webinar, which will be held from 2:00-3:30 p.m. ET.

Experts on the program include:

• Adam A. Lewis of Morrison Foerster, lead counsel for Amalgamated Bank before the Court.
• David Neff of Perkins Coie LLP (Chicago), the counsel of record for petitioner RadLAX Gateway Hotel LLC and participant in the argument.
• Jason S. Brookner of Andrews Kurth LLP (New York), whose article was cited in the brief for the respondent.
• Prof. Charles Tabb, the Alice Curtis Campbell Professor of Law at the University of Illinois College of Law, who recently published a paper titled "Credit Bidding, Security, and the Obsolescence of Chapter 11."

ABI Resident Scholar David Epstein will be the moderator for the webinar.

The webinar costs $115 and purchase provides online access for 180 days. If you are purchasing a live webcast, you will receive complimentary access to the on-demand version for 180 days once it becomes available. Click "Read More." below for more information.

Cliffs Club & Hospitality Group Inc. is seeking to keep exclusive control over its chapter 11 case through Oct. 1 as it works to win court approval of a plan that would hand control of the company to an investor consortium led by Carlile Group, Dow Jones DBR Small Cap reported today. In court papers filed on Thursday, the company said it needs the extension to complete the plan and sale to the Carlile-led group, which emerged as the company's buyer after no one stepped forward to challenge it at a chapter 11 auction earlier this year.

Barclays Plc. has won as much as $5.5 billion from the liquidator of Lehman Brothers Holdings Inc.'s brokerage since buying the defunct investment bank’s North American business more than three years ago, Bloomberg News reported yesterday. A federal judge on Tuesday told the brokerage to pay Barclays what it owed, saying that the final sale documents showed the parties' true intent. Trustee James Giddens originally demanded $7 billion from Barclays, saying that he had not read last-minute changes to the contract in the September 2008 chaos after the Lehman parent filed the biggest bankruptcy in U.S. history. U.S. District Judge Katherine Forrest ordered Giddens to pay London-based Barclays $1.1 billion and renounce his claim to $1.5 billion in margin assets backing trading operations that Barclays took over from Lehman. In confirming part of a lower-court decision, Forrest cost Giddens a total of $3.5 billion in margin and $2 billion in clearance-box assets, held to clear trades, the trustee said on Tuesday.

Vitro SAB is asking a Bankruptcy Judge Harlin DeWayne Hale to enforce its restructuring plan and stop litigation by debt holders who have been fighting to collect on $1.2 billion in defaulted bonds, Bloomberg News reported yesterday. The bondholders have called the plan, which was approved by a Mexican court, "a testament to audacity, brazen manipulation and greed." Enforcing it in the U.S. would be "manifestly contrary" to public policy, they said in court papers. Vitro and bondholders have been fighting over the restructuring in Mexican and U.S. courts, with creditors suing Vitro subsidiaries that guaranteed company debt to recover what they are owed.

The law firm Brown Rudnick has been tapped to represent the unsecured creditors' committee in the bankruptcy of legal giant Dewey & LeBoeuf, Reuters reported yesterday. Dewey, which was once one of the largest law firms in the U.S., filed for bankruptcy protection on May 28 after the vast majority of its partners defected to rivals amid concerns about its heavy debt load and ability to compensate its lawyers. Edward Weisfelner, who heads the bankruptcy and corporate restructuring practice at Brown Rudnick, confirmed his firm's role in Dewey's bankruptcy proceedings. The case is In re Dewey & LeBoeuf, U.S. Bankruptcy Court, Southern District of New York, No. 12-12321.