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Bankruptcy Judge Shelley C. Chapman said that LightSquared can keep control over its chapter 11 case until at least the summer after the wireless satellite company struck a deal with lenders to involve them more closely in the reorganization process, Dow Jones Newswires reported yesterday. The extension gives LightSquared until May 31 to file reorganization plan and July 15 to solicit votes on such a plan without the threat of rival proposals. The deal, filed with the bankruptcy court on Wednesday, calls for LightSquared to only propose a reorganization plan that the lender group supports or that pays the group in full, in cash, along with other creditors. The lender group, owed about $1.1 billion, can file its own plan if LightSquared does not consult with it or if the company breaches the terms of an agreement that allows it to use cash secured by the lenders' loans.

A judge has confirmed the reorganization plan for the oldest junior college in Texas, the Associated Press reported yesterday. Lon Morris College, a two-year Methodist college in the East Texas town of Jacksonville, filed for bankruptcy and suspended classes last year. The campus was sold at auction last month, with most of the property bought by a local school district and an office supply company. An interim payment had previously been negotiated for employees who had not been paid for their final weeks of work. Last week the college announced agreements with several Methodist foundations that are expected to result in the former employees receiving all of their back wages.

Schmidt's Bakery and Delicatessen filed for chapter 7 bankruptcy, listing just over $44,000 in assets against more than $814,000 in liabilities that include tax deficiencies for state sales and wage withholding taxes, and $190,000 in federal payroll tax withholdings that the Internal Revenue Service said it never received, the Denver Post reported yesterday. The Loveland, Colo.-based bakery and delicatessen was seized by Colorado tax agents on the morning of Jan. 8. The court filing lists 102 creditors, including 40 employees.

No rival bidders stepped forward to make an offer on Journal Register Co.'s assets, leading the publisher to cancel a planned auction and seek approval of a transaction, valued at $122.2 million, with its hedge fund owner, Dow Jones DBR Small Cap reported today. The company behind local newspapers like the New Haven Register will skip straight to a sale hearing at which a judge will consider approving a bid from an affiliate of hedge fund Alden Global Capital LLC. Alden's bid includes $114.2 million in debt it is agreeing to waive.

The board of the State University of New York (SUNY) on Friday voted unanimously to move forward with closing of Long Island College Hospital, Dow Jones DBR Small Cap reported today. John Williams, president of SUNY Downstate Medical Center, which runs LICH, recommended to the board on Thursday that the hospital be closed, saying that it has a projected deficit of $41 million this fiscal year.

For further analysis of health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition.

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.

Hostess Brands Inc. won bankruptcy court approval to hold auctions for brands including Wonder Bread, Twinkies and Drake's, Bloomberg News reported yesterday. Bankruptcy Judge Robert Drain yesterday approved Flowers Foods Inc., McKee Foods Corp., United States Bakery Inc., Apollo Global Management LLC and C. Dean Metropoulos & Co. as stalking-horse bidders for most of Hostess' cake and bread brands, setting the thresholds other suitors will have to exceed. A sale hearing, to approve the highest and best bids, is set for March 19.

Bahrain-based Arcapita Bank, the first Gulf company to file for bankruptcy in the U.S. under chapter 11, said on Saturday that it had submitted a plan to reorganize the company, Reuters reported yesterday. The investment firm filed for bankruptcy in New York in March and was given court approval in November to take out a $125 million loan to provide funding while it restructured its debts. Arcapita's case is being closely watched in the Gulf, where companies have little recourse to dealing with insolvency in an orderly fashion. However, analysts have said few other bankrupt Gulf companies are likely to follow Arcapita in seeking chapter 11 protection because they would need to prove strong business links to the United States.

After nearly a year under chapter 11 protection, home builder American West Development Inc. won court approval to exit bankruptcy, the Las Vegas Review-Journal reported on Saturday. Bankruptcy Judge Mike Nakagawa on Friday overruled objections to a fund that will cover construction defect claims and approved the company's bankruptcy reorganization plan. As a result of a bargain reached with lenders before the case began on March 1, 2012, American West’s debt, $162 million, will be reduced to $49.6 million, reflecting the shrunken value of the Las Vegas-based home builder. The banks agreed to give up their claim to a $112.4 million shortfall, creating the financial room to repay small creditors without any collateral. In court papers filed last month, American West president Robert Evans estimated they could receive as much as 80 percent of the $2.3 million they are owed.

A group of retired Dewey & LeBoeuf partners whose objections threatened to drag out or even derail the defunct firm's bankruptcy proceedings have reached a settlement that Dewey lawyers say should clear the way for the speedy approval of a pending chapter 11 plan, Am Law Daily reported today. The settlement, detailed in Thursday court filings, has been offered to 125 retired Dewey partners—most of them tied to legacy firm LeBoeuf, Lamb, Green & MacRae—who are being asked to repay the bankruptcy estate a portion of money they received from the firm in 2011 and 2012, including tax advances, payments from non-qualified retirement plans, and Of counsel and special counsel compensation. The retired partners also agreed to forsake future claims against the Dewey estate; abandon some $80 million in proofs of claim filed in the bankruptcy; assign any claims against former Dewey partners, employees, or firm leaders to the estate; and drop their appeal of a $70 million partner contribution plan signed on to by a majority of the firm's former partners. The settlement requires the approval of Bankruptcy Judge Martin Glenn, who has already approved the partner contribution plan.