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Gabriel Technologies Corp., a developer of global-positioning technology, filed for chapter 11 bankruptcy last week after a billion dollar lawsuit the company filed in 2008 against Qualcomm Inc. backfired, Bloomberg News reported yesterday. Having sued Qualcomm for patent infringement, Gabriel's doom was sealed in October when a federal district judge dismissed the last of the claims against San Diego-based Qualcomm. Earlier this month Qualcomm won a $12.4 million judgment against Gabriel for pursuit of what Qualcomm called an "objectively baseless" lawsuit brought in "bad faith." Gabriel claimed in the chapter 11 petition that assets and debt both exceed $10 million. The case is In re Gabriel Technologies Corp., 13-30340, U.S. Bankruptcy Court, Northern District California (San Francisco).

RDA Holding Co., publisher of the 91-year-old Reader’s Digest magazine, filed for bankruptcy to cut $465 million in debt and focus on North American operations as consumers shift from print to electronic media, Bloomberg News reported today. Reader’s Digest, founded by DeWitt and Lila Wallace, went public in 1990. An investor group led by private-equity firm Ripplewood Holdings LLC bought it in 2007 for $1.6 billion and the assumption of about $800 million in debt. The company also filed for bankruptcy in August 2009, citing a drop in advertising spending and the debt load incurred in its acquisition. The company listed assets and debt of more than $1 billion each in chapter 11 documents filed yesterday. Under a restructuring agreement supported by Wells Fargo & Co., $465 million of remaining senior notes will all convert to equity. The company expects to have about $100 million in debt when it exits chapter 11, about an 80 percent reduction.

Mid America Brick & Structural Clay Products LLC filed for chapter 11 protection on Friday, the St. Louis Business Journal reported today. Company officials said that the depression of the U.S. housing market and over-capacity in the brick industry prevented it from meeting sales and profitability projections. Mid America Brick intends to reorganize and has obtained debtor-in-possession financing from a consortium led by an affiliate of Advantage Capital Partners, a St. Louis venture capital and small business finance firm. The Mexico, Mo.-based business has 50 to 99 creditors, estimated assets of $1 million to $10 million and estimated liabilities of $10 million to $50 million, according to the bankruptcy filing.

Liberty Medical Supply Inc. and affiliates that provide products and services for people with diabetes and other ailments filed for chapter 11 protection amid pressure from creditors, Bloomberg News reported on Friday. The Port St. Lucie, Fla.-based company listed assets and debts of as much as $500 million each in court papers filed on Friday. Among the largest unsecured creditors listed in court papers were CGS Administrators of Nashville, Tenn., owed $137 million, and Abbott Laboratories of Abbott Park, Ill., owed more than $5 million. The case is In re Liberty Medical Supply Inc., 13-10268, U.S. Bankruptcy Court, District of Delaware (Wilmington).

The award-winning visual-effects company Rhythm & Hues, considered one of the industry's leaders, is laying off 200 employees as it files for bankruptcy protection, the Los Angeles Times reported today. The studio, which worked on Ang Lee's "Life of Pi," nominated for a visual-effects Oscar, told some employees not to report to work Monday and said that the studio was have difficulty meeting its payroll obligations. The layoffs and planned bankruptcy filing are the latest signs of distress among California-based visual-effects companies that have had an increasingly difficult time competing with companies in Canada, the UK and India that benefit from tax credits or cheaper labor to produce visual effects at a lower cost. More than a half-dozen California visual-effects houses have shut down or filed for bankruptcy in recent years because of growing global competition. The parent company of Venice, Calif.-based Digital Domain, co-founded by director James Cameron, filed for bankruptcy protection last year.

OceanConnect LLC, a trading firm that accidentally sold millions of dollars worth of fake biofuel credits, has filed for bankruptcy, increasing pressure on environmental regulators to fix the fraud that’s infected that market, the Wall Street Journal reported on Saturday. OceanConnect filed for chapter 7 protection on Friday, facing a handful of lawsuits from top gasoline refiners who have demanded to be reimbursed after purchasing the fake credits through OceanConnect’s brokerage operations. OceanConnect said in court papers that it ended last year with a $1.7 million loss. In its bankruptcy petition, the company said that it still had about $350,000 worth of biofuel credits in hand.

With its patient census shrinking after news of a Medicare audit, San Diego Hospice filed for chapter 11 protection yesterday, the San Diego Union-Tribune reported today. San Diego Hospice’s financial problems began in mid-November, when it revealed that it faced the possibility of refunding millions to Medicare because its admissions policies did not follow government guidelines closely enough. The hospice, which potentially owes millions to the government, enacted an austerity plan in late November, laying off more than 260 employees and closing its 24-bed hospital in Hillcrest. Read more:
http://www.utsandiego.com/news/2013/feb/04/hospice-files-for-bankruptcy/

For more on financial distress in the health care industry, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition available now in the ABI Bookstore.

Utah coal producer American West Resources Inc. has filed for chapter 11 protection with a plan to sell its assets, Dow Jones DBR Small Cap reported today. America West is the parent company of Hidden Splendor, an 80-acre property with an 8.9-acre mine located outside of Helper, Utah. Hidden Splendor, acquired by America West during the mine's 2007 chapter 11 filing, stopped mining coal in 2012 but the company has continued to incur costs of $40,000 to $50,000 a week to maintain the mine.

TV star Paul Teutul Sr., founder of Orange County Choppers Holdings Inc., sought chapter 7 bankruptcy for his merchandising unit with plans to liquidate its assets, Bloomberg News reported on Friday. The family-run custom-built motorcycle company operated by Teutul and his son, Paul Jr., is based in Newburgh, N.Y. Its Hudson Valley Merchandising LLC listed $1.12 million in assets and $1.44 million in debts in papers filed in court on Thursday. The parent company did not file.

Otelco Inc. plans to seek support for a pre-packaged chapter 11 filing from its senior subordinated notes holders in an effort to reduce its overall debt by roughly $135 million, MarketWatch.com reported today. The wireline telecommunication services provider said that it currently has more than $32 million in cash and sufficient liquidity to consummate the transaction. Otelco ended the third quarter with total liabilities of roughly $330.1 million. The company said that its senior lenders have agreed to amend and extend the company's current senior financing through April 2016.