%1

Shipping firms have paid millions of dollars into U.S. accounts to prevent their vessels from being detained due to non-payment of bills for fuel supplied by the bankrupt OW Bunker, indicating the impact from the collapse of the Danish firm was spreading, Reuters reported today. OW Bunker filed for bankruptcy in November after losing almost $300 million in alleged fraudulent trading in Singapore, leading to claims by distributors who sold shipping fuel on behalf of OW Bunker but had not been paid. Nearly 13 cases involving bunker bills totaling about $12 million have been filed at New York's southern district court, a maritime lawyer said. U.S. court documents seen by Reuters show 11 firms, including Germany's Hapag Lloyd and European gas carrier Exmar, have agreed to pay about $10.3 million into court and a law firm's trust account since November.

Life insurer MetLife Inc. said that it intends to sue the U.S. today over a ruling that it poses significant risks to the financial system and warrants tougher federal oversight, the Wall Street Journal reported today. The nation’s largest life insurer by assets would become the first to challenge the “systemically important” designation from the Financial Stability Oversight Council, a panel of regulators chaired by Treasury Secretary Jacob Lew that determines which financial firms deserve more scrutiny as a way of averting another widespread crisis. Three other nonbank financial firms received the same label, but American International Group Inc., General Electric Co.’s finance arm and Prudential Financial Inc. decided not to bring a lawsuit testing the accuracy of the assessment. MetLife Chairman and Chief Executive Steven Kandarian called the U.S. designation “premature” because the rules aren’t yet crafted that will govern MetLife and the other insurers. “The council should wait until the rules are in place and it knows the impact on designated firms,” he said.

A bankruptcy judge said that he would allow Jon S. Corzine and other former MF Global Holdings Ltd. executives and employees to tap the rest of their insurance money to pay for defense costs, but he is "concerned" with how quickly the money is being spent — though it isn't within his power to stop it, the Wall Street Journal reported on Saturday. In a ruling filed on Thursday, Bankruptcy Judge Martin Glenn lifted bankruptcy law's automatic stay to allow more than a dozen defendants to tap most of the $200 million remaining on the failed commodities brokerage's so-called "directors and officers" insurance policies. Those defendants include onetime Chief Executive Corzine, former operating chief Bradley Abelow and other executives and higher level employees. The former company officials are defending themselves against a number of civil actions and regulatory proceedings related to the bankruptcy of the broker-dealer in the fall of 2011. The judge said that $13.1 million of the money will be reserved for a potential claim MF Global could make against the policies, but the rest would be available for the defense costs. Apart from that, though, he said that because MF Global entities don't have claims that could be covered by the insurance money, he can't stop the former employees from accessing the money.

Robert Benmosche, the chief executive of insurance giant AIG, said he is stepping down this weekend after learning he has less than a year to live, the New York Post reported yesterday. Benmosche, who was diagnosed with cancer in 2010, said that he was given nine to 12 months to live in May and is stepping down sooner than planned as his health declines. He is expected to exit in early 2015. The company announced in June that Peter Hancock would succeed Benmosche as president and CEO. Benmosche rose to the top job five years ago after the government bailed out the New York-based insurer to the tune of $85 billion. AIG repaid the bailout funds, while the government made a profit of nearly $23 billion from interest and the sale of its stake in the firm.

The family of a man shot to death while finishing his shift at a Little Rock, Ark., Sbarro store received a small measure of relief from the pizza chain’s bankruptcy judge on Monday, The Wall Street Journal reported yesterday. Hon. Martin Glenn lifted a provision of Sbarro's bankruptcy-exit plan so that the estate of the late Christian Ellis Hayes can go after the company’s liability insurance in an Arkansas lawsuit. Hayes and a coworker were shot in February 2013 as they closed the Sbarro inside the Park Plaza Mall. The order, signed by Judge Glenn, said that any money from Sbarro "shall be paid solely from the proceeds of the insurance and not by or from these debtors, their estates, or their successors."

A federal appeals court ordered Travelers Cos. Inc. to pay more than $500 million to thousands of asbestos victims in a case stemming from the insurer's coverage of Johns-Manville Corp., Reuters reported today. The Second U.S. Circuit Court of Appeals reversed a February 2012 ruling in which U.S. District Judge John Koeltl said that conditions under three settlement agreements in 2004 that required Travelers to make the payment had not been satisfied. Circuit Judge Ralph Winter said that Judge Koeltl's interpretation "could not reasonably have been intended by the parties, whatever Travelers's private hopes and dreams, and is not supported by the language of the agreements." The Second Circuit ordered the reinstatement of a 2011 ruling by the late Hon. Burton R. Lifland, who oversaw Johns-Manville's bankruptcy, that Travelers make payments required under the 2004 agreements, plus $65 million of interest. Judge Koeltl had reversed that ruling. A Travelers spokesman said that the insurer is reviewing Tuesday's decision and has set aside reserves to cover the entire payout, apart from interest payments. The case is Common Law Settlement Counsel, et al. v. Travelers Indemnity Co., et al., Second U.S. Circuit Court of Appeals, Nos. 12-1094, 12-1140 and 12-1205.

New York Attorney General Eric Schneiderman asked a judge to dismiss American International Group Inc.’s lawsuit against the state’s top financial regulator, saying the insurer is trying to interfere with a probe of unlicensed overseas insurance sales, Bloomberg News reported yesterday. “The investigation of AIG is not complete, and it remains to be seen what statutory violations, if any, would be charged,” Schneiderman said in a memo to U.S. District Judge Alison Nathan in Manhattan. AIG, based in New York, sued the Department of Financial Services and its superintendent, Benjamin Lawsky, in April to block the regulator from fining it for selling insurance overseas without a state license. The insurer claims the state law is unconstitutional, violates its free-speech rights and discriminates against out-of-state commerce. AIG was rescued by taxpayers in a bailout that began in 2008 and swelled to $182.3 billion. The insurer finished repaying the U.S. in 2012.

The Archdiocese of Milwaukee filed a lawsuit on Wednesday in bankruptcy court seeking to recover more than $2.6 million in legal fees from the firm now known as OneBeacon Insurance Co., the Milwaukee Journal Sentinel reported today. On the same day, OneBeacon asked Bankruptcy Judge Susan V. Kelley to lift the automatic stay imposed by the bankruptcy on all litigation involving the archdiocese so the Wisconsin Supreme Court can decide once and for all whether the insurer is liable for the church's actions related to the sexual abuse of children. The filings come as the archdiocese is completing work on a reorganization plan that will detail how it plans to compensate creditors, including victims, and finance its continued operations. The plan is expected to include millions of dollars in legal fees.

The Archdiocese of Milwaukee and its insurance companies may be poised for a settlement that could fast-track a resolution of its nearly three-year-old bankruptcy, but lawyers for sex-abuse victims with claims against the church are objecting, saying that any settlement talks must include victim-survivors, the Milwaukee Journal Sentinel reported on Saturday. The archdiocese has asked U.S. District Judge Rudolph T. Randa to stay its lawsuit against Stonewall Insurance Co. and other carriers for 60 days so that the parties can enter mediation, a move that would presumably also put on hold Randa's pending decision on whether the insurers are liable for sex-abuse claims against the archdiocese. Attorneys for victims oppose the stay, saying that a definitive decision from Judge Randa on the insurance question is needed to move the case forward. There also is a concern that without the creditors' participation, the archdiocese and its insurers could agree on an unreasonably low figure, although the creditors would have an opportunity to object.

IndyMac Bancorp's former chief executive says a federal judge erred when he ruled the failed bank's insurers didn't have to pay for his defense costs in a legal fight with government regulators over allegations of fraud and securities violations, Dow Jones Daily Bankruptcy Review reported today. Lawyers for Michael W. Perry told a federal appellate court in California on Thursday that an interrelated wrongful acts exclusion provision in IndyMac's $80 million directors' and officers' insurance policy shouldn't let insurers off the hook for his defense costs in his legal fight with the Securities and Exchange Commission. The SEC sued Perry along with IndyMac's former finance chief, alleging that the failed thrift didn't properly disclose the risks of its subprime-mortgage holdings to investors.