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Bankruptcy Judge Kevin Gross yesterday cleared the way for creditors to vote on the chapter 11 plan that sets out the distribution scheme for cash and stock raised in the sale of failed hybrid auto maker Fisker Automotive Inc., the Wall Street Journal reported today. Judge Gross signed off on voting materials, allowing balloting to begin on the chapter 11 payout plan for the old Fisker, the remnant of the operating company that was sold for $149.2 million to China's Wanxiang Group. Fisker, its unsecured creditors and the company's secured lender, a company connected to Hong Kong billionaire Richard Li, settled their differences over dividing the sale proceeds in advance of yesterday’s hearing in bankruptcy court.

A group of creditors attempting to force defunct consumer law firm Jacoby & Meyers Bankruptcy LLP into chapter 11 protection are urging a court to rule that bankruptcy is the best way to protect unhappy clients left in the lurch by the firm’s demise, The Wall Street Journal Law Blog reported Wednesday. In a Tuesday filing with the U.S. Bankruptcy Court in New York, creditors like online document service Legal Zoom say that “the total lack of disclosure and transparency” surrounding the firm’s December 2013 closure prompted them to file an involuntary bankruptcy petition against the firm in March. Jacoby & Meyers Bankruptcy was formed in June 2012 as an alliance between national consumer firm Jacoby & Meyers LLC and the bankruptcy practice of Chicago lawyer Thomas Macey. A year and a half later, Jacoby & Meyers Bankruptcy closed and put itself into the hands of a trust intended to liquidate the firm and repay its debts. Creditors say the firm’s trustee isn’t going far enough and would like to see the firm unwound through bankruptcy. Representatives from the defunct firm and those bringing the involuntary petition are scheduled to appear May 28 before Judge Shelley Chapman.

Bankruptcy Judge Robert Gerber yesterday partly upheld efforts by creditors of the former Lyondell Chemical Co. to reclaim money from its shareholders, in a ruling that could help resolve the murky issue of how far shareholder protections extend when companies go bankrupt, Reuters reported yesterday. Judge Gerber dismissed one fraud claim against shareholders in the $6.3 billion lawsuit, but allowed another one to proceed. He also said that the creditors, who are represented by a trust, could replead the dismissed count, keeping the lawsuit alive. More critically, Gerber's decision denied a portion of the shareholders' bid to dismiss the lawsuit in which they argued that "safe harbor" protections afforded to shareholders under bankruptcy laws also apply under state laws.

Three years after it declared bankruptcy as a way to deal with its mounting sex abuse claims, the Archdiocese of Milwaukee is poised to file the reorganization plan that will detail how it compensates abuse victims and operates as an institution into the future, the Milwaukee (Wis.) Journal Sentinel reported today. The archdiocese is preparing that plan, but it has offered few hints about its content or when it might be filed in bankruptcy court. The Milwaukee bankruptcy, filed by Archbishop Jerome Listecki in January 2011, came after the archdiocese had been largely successful in fighting lawsuits dating back at least to the 1950s. With 575 sex abuse claims and legal fees topping $11 million, it is one of the largest and most contentious bankruptcies filed by Catholic dioceses around the country, say observers and lawyers who've worked on those cases.

Constar International Holdings LLC, which is headed into a bankruptcy auction for its assets, yesterday chose an affiliate of Black Diamond Capital Management to finance its bankruptcy after a "mini-auction" urged by the judge presiding over the case, Dow Jones Newswires reported yesterday. Bankruptcy Judge Christopher Sontchi indicated he would approve the new deal with Black Diamond, which bested other existing backers led by Solus Alternative Asset Management LP in a competition for the right to loan money to Constar in chapter 11. The Philadelphia-based maker of plastic containers is putting its assets up for auction, with a $68.5 million buyout offer from an affiliate of Australia's Amcor Ltd. to set a floor price, and strong interest from Michigan's Plastipak Holdings Inc., and Georgia's CKS Packaging.

Bankruptcy Chief Judge Mary Gorman (C.D. Ill.) has denied the bankruptcy petitions of Jeff Parsons and THR after trustees in the cases accused Parsons of attempting to hide millions in cash and assets, the Springfield (Ill.) Journal-Register reported on Friday. In effect, according to bankruptcy experts, Parsons and THR would remain liable for hundreds of millions of dollars’ worth of debt listed in the original bankruptcy petitions filed in September 2012. Denial of a bankruptcy petition is unusual, said John Penn, a Dallas attorney who serves as an expert for the American Bankruptcy Institute. “Imagine going in for surgery to fix an ailment,” Penn says. “You have the surgery and are recovering, but you still have the same ailment. That’s what this judgment is.” The Nov. 14 ruling can be appealed, though an appeal had not been filed as of last week, according to court records.

The trustee liquidating failed New York law firm Dewey & LeBoeuf LLP filed a $21.8 million complaint on Wednesday against two of the firm's leaders, former Executive Director Stephen DiCarmine and former Chief Financial Officer Joel Sanders, Dow Jones Daily Bankruptcy Review reported today. The complaint outlines a number of alleged financial irregularities at the firm — whose management is the focus of an ongoing criminal investigation — including $1.2 million loans to DiCarmine and Sanders. The suit seeks to claw back lavish compensation packages the pair received in the years leading up to Dewey's 2012 collapse.

A bipartisan group of U.S. House and Senate members is seeking to make it easier for investment fraud victims to seek compensation, after investors in Allen Stanford's Ponzi scheme were deemed ineligible under current law to file claims, Reuters reported yesterday. The bill, introduced by Sens. David Vitter (R-La.), Charles Schumer (D-N.Y.), Reps. Scott Garrett (R-N.J.) and Carolyn Maloney (D-N.Y.), would bestow greater powers on U.S. securities regulators to oversee the process of determining whether customers of failed brokerages qualify for compensation. The legislative proposal comes as the Securities and Exchange Commission awaits a crucial decision from a U.S. appeals court over the fate of the Stanford victims. The SEC is trying to get the court to force an industry-backed fund that protects investors to start court proceedings so Stanford victims can file claims to recover a least a portion of the millions they lost. The Securities Investor Protection Corp., or SIPC, which administers the fund, has refused the SEC's request, saying Stanford investors do not meet the legal definition of "customer" under the federal law designed to protect investors if their brokerage collapses.

Longview Power LLC is proposing to get out of bankruptcy by way of a chapter 11 plan that drops $1 billion in debt from its balance sheet and provides money to cover the cost of fixing the problem-plagued plant, Dow Jones Newswires reported yesterday. Outlined in court papers yesterday, Longview's restructuring proposal has the support of senior lenders who have agreed to swap some of their debt for equity in a reorganized company. Some of them have signed up to provide a $150 million loan to fund Longview's exit from Chapter 11, as well as fix the plant and keep it running, saving some 650 jobs in the process. The new loan and the chapter 11 plan marks a way out for Longview not just from bankruptcy but from a looming cash crunch. With some $58 million worth of letter of credit borrowing power locked up in a dispute with contractors, and a plant running at partial capacity, Longview has warned of possible irreparable harm if the financing does not go through.

Advantage Rent a Car is seeking court approval to zoom through bankruptcy with a fast-track auction at which its bankruptcy lender will start the bidding, Dow Jones Daily Bankruptcy Review reported today. The car-rental chain on Tuesday filed court papers asking court permission to let it sell its assets to Catalyst Capital Group Inc., subject to higher bids at a Dec. 9 auction.