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Without clear instructions from the Bankruptcy Code on what to do with the unclaimed money that is too small to distribute among a liquidated company’s creditors, ABI is encouraging members to donate the money to the organization’s own nonprofit endowment fund, the Wall Street Journal reported today. “Rather than having it [turn over] to the state, why not recycle it into the bankruptcy community?” said ABI executive director Sam Gerdano. ABI has a 131-word passage posted on its website that bankruptcy attorneys can copy and paste into creditor payout plans to direct the money to the fund, which pays for scholarship and bankruptcy research. The trade group’s initiative comes at a time when many restructuring professionals are confused over what to do with unexpected leftover money in a liquidating chapter 11 bankruptcy case. That money can come from uncashed creditor checks, tax rebates or returned utility deposits. ABI’s endowment fund pays for bankruptcy-related research into topics such as the high fees in corporate bankruptcy cases or the cost of bankruptcy for individuals. “In lieu of people throwing around anecdotes or impressions or first-hand experiences, we provided data-supported conclusions,” said University of Maine Law Professor and Bankruptcy Attorney Lois Lupica.

For more information about donating unclaimed liquidation funds to the ABI Endowment Fund, please click here: http://endowment.abi.org/unclaimed

The U.S. Trustee Program yesterday demanded extraordinary penalties for financial adviser Capstone over alleged coverups during GSC Group Inc.'s bankruptcy, seeking to strip millions of dollars in fees as a heated trial came to a close, Reuters reported today. The U.S. Trustee Program alleged that Capstone deliberately misrepresented the employment status of the adviser assigned to the GSC case in an effort to cover up unlawful fee arrangements. It earlier settled similar allegations against the adviser, Robert Manzo, and against Kaye Scholer, the law firm that advised GSC, which the U.S. Trustee said knew about the fee arrangements. Kaye Scholer agreed to pay $1.5 million and to appoint an independent expert to review its disclosure policies. Both Kaye Scholer and Manzo agreed to leave the case.

The House Financial Services Oversight and Investigations subcommittee will hold a hearing today at 10 a.m. ET titled “Who Is Too Big to Fail: Does Title II of the Dodd-Frank Act Enshrine Taxpayer-Funded Bailouts?” The witness list includes Prof. David A. Skeel of the University of Pennsylvania Law School, Dr. John B. Taylor of Stanford University, Josh Rosner of Graham Fisher & Co. and Michael Krimminger of Cleary Gottlieb. For more information, please click here: http://financialservices.house.gov/calendar/eventsingle.aspx?EventID=33…

ABI’s Commission to Study the Reform of Chapter 11 will hold its fourth public hearing of 2013 from 3-5 p.m. ET following ABI’s Bankruptcy Fundamentals: Nuts & Bolts for Young and New Practitioners Program in New York City. Two panels of expert witnesses will provide their testimony on chapter 11 issues before the Commission. Issues to be discussed include financial contracts, derivatives, safe harbor, orderly liquidation authority, chapter 14 and other alternatives. To watch a live webcast of the hearing, view the witness list and access the prepared witness testimony, be sure to visit http://commission.abi.org.

A bankruptcy court judge yesterday approved the Revel Casino's chapter 11 reorganization plan that wipes out most of its debt and provides new money for it to operate, the Associated Press reported yesterday. Bankruptcy Judge Judith Wizmur approved Revel's plan to grant an 82 percent ownership stake to lenders in return for canceling $1.2 billion worth of debt. Revel's annual interest payments will fall from $102 million to $46 million. The casino plans to put money that previously went toward debt to operations now. Before filing for chapter 11 protection in March, Revel had $1.52 billion in debt. Upon its exit from bankruptcy court, which could happen within days, it will have $272 million in debt.

Vodka seller Central European Distribution Corp., headed by Russian billionaire Roustam Tariko, won court approval of its pre-packaged restructuring plan a little more than a month after filing for bankruptcy, Bloomberg News reported yesterday. Bankruptcy Judge Christopher Sontchi approved the Warsaw, Poland-based company’s reorganization plan that cuts debt by about $665 million at a hearing today in Wilmington, Delaware, according to court documents. The company expects that it will be able to close on the restructuring transactions on or about May 31, according to the statement. Regulatory agencies in CEDC’s key markets of Poland, Russia and Ukraine already have given their approvals to the deal.

The U.S. Trustee Program is expected to unveil the first overhaul in nearly 17 years of the guidelines intended to keep bankruptcy costs in check on July 1, the Wall Street Journal reported today. The effort aims to tamp down on fee and expense applications submitted by attorneys for corporate debtors and sometimes creditors. The challenges come from the U.S. Trustee Program, the wing of the Department of Justice that monitors bankruptcy cases, as well as some bankruptcy judges. Spurring the effort to alter the guidelines are concerns that unjustified costs can give the impression that professionals are billing for money that rightly belongs to the people and businesses they are serving. The U.S. Trustee Program has attempted to curb fees and expenses for decades, but with the guidelines, under review for at least the last 18 months, it is refocusing its sights. "Evidence of improper expense reimbursements, even small ones (e.g., a professional billing an estate for a pack of chewing gum), reinforces the perception of abusive billing," according to a 2011 paper on bankruptcy fees co-written by U.S. Trustee Program Director Clifford J. White III. "While such reimbursements are frequently dismissed as isolated mistakes, the picture that emerges can be one of professionals who see the bankruptcy estate as an easy source of revenue." The proposed guidelines, which are expected to apply to attorneys in bankruptcy cases with $50 million or more in assets or liabilities, have gone through two drafts so far. Among the proposals: Expenses should be prorated where appropriate, and applicants shouldn't request reimbursements for "overhead" such as word processing and phone calls. The updated guidelines will be posted on the program's website and published in the Federal Register, and are expected to go into effect a few months later, according to the U.S. Trustee Program.

The House Financial Services Oversight and Investigations subcommittee will hold a hearing on Wednesday at 10 a.m. ET titled “Who Is Too Big to Fail: Does Title II of the Dodd-Frank Act Enshrine Taxpayer-Funded Bailouts?” The witness list includes Prof. David A. Skeel of the University of Pennsylvania Law School, Dr. John B. Taylor of Stanford University, Josh Rosner of Graham Fisher & Co. and Michael Krimminger of Cleary Gottlieb. For more information, please click here: http://financialservices.house.gov/calendar/eventsingle.aspx?EventID=33…

Billionaire investor John Paulson has put a real estate unit of his hedge fund into bankruptcy to thwart a lawsuit by a lender that claims it is owed tens of millions of dollars related to the recent sale of several luxury resorts, Reuters reported yesterday. According to court filings on Wednesday, MSR Hotels & Resorts Inc. sought chapter 11 protection from creditors to sell its remaining assets and wind down. MSR in February won court approval to sell four resorts to the Government of Singapore Investment Corp. sovereign wealth fund for $1.5 billion, including assumed debt, court papers show.

A report to be released today could embolden creditors of bankrupt mortgage lender Residential Capital LLC to pursue billions of dollars of cash that its parent, Ally Financial Inc., had planned to use to repay a U.S. government bailout, Reuters reported today. The report by a court-appointed examiner deals with allegations of improper activity before the ResCap bankruptcy, including claims that Ally Bank was stripped from ResCap. ResCap creditors have said that Ally, which is about three-quarters owned by the U.S. government, could be on the hook for up to $25 billion owed to them by ResCap. Former bankruptcy judge Arthur Gonzalez was appointed by a bankruptcy court last year to examine the pre-bankruptcy deals between Ally, ResCap, Ally investor Cerberus Capital Management LP and others. Gonzalez also investigated the negotiations that led to Ally's initial proposed settlement, which was rejected by ResCap creditors.