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The Rhode Island Economic Development Corp. sued Wells Fargo & Co., Barclays Plc and Curt Schilling, the former chairman of video-game maker 38 Studios LLC, claiming that undisclosed risks led to the bankruptcy of the company, Bloomberg News reported yesterday. The banks and Schilling, the former Boston Red Sox pitcher who founded 38 Studios, did not disclose to the state's economic development organization the negative information about the company’s financial projections and business plan, according to a filing today in Rhode Island Superior Court. The EDC board in 2010 approved the issuance of $75 million in bonds to finance a loan to allow 38 Studios to move to Providence, R.I., from Massachusetts and complete a multiplayer online game called Copernicus. The company had not yet published a video game, according to the complaint.

Two Republican senators asked U.S. Treasury Secretary Timothy Geithner yesterday for a thorough review of a Chinese company's plan to acquire bankrupt battery maker A123, saying that military and taxpayer-funded technology must be protected, Reuters reported yesterday. China's Wanxiang Group Corp is currently locked in a battle with U.S.-based Johnson Controls Inc to buy A123, which makes lithium ion batteries for electric cars. A123 also had two contracts worth a total of more than $4 million to develop batteries for the Air Force, one of which is still ongoing, an Air Force official said. Senators John Thune (R-S.D.) and Chuck Grassley (R-Iowa) said the powerful Committee on Foreign Investment in the U.S. (CFIUS), led by Geithner, should review the transaction to make sure U.S. military and taxpayer interests in A123 are protected. To acquire A123, Wanxiang needs approval from the Chinese government and from CFIUS, a U.S. inter-agency panel that vets foreign deals for security concerns.

Following two public comment periods and a public meeting, the United States Trustee Program (USTP) has updated its proposed guidelines for attorney compensation in larger chapter 11 cases, the USTP announced today. For purposes of these guidelines, a larger chapter 11 case is defined as a chapter 11 case with $50 million or more in assets and $50 million or more in liabilities, aggregated for jointly administered cases and excluding single asset real estate cases as defined in 11 U.S.C. § 101(51B). The USTP is accepting public comments on the updated proposed guidelines through Nov. 23, 2012. A document containing the updated proposed guidelines, a summary of the significant revisions to the initial version of the proposed guidelines posted on November 4, 2011, and the USTP’s analysis of comments received is available at http://www.justice.gov/ust/eo/rules_regulations/guidelines/proposed.htm. Comments on the updated proposed guidelines should be submitted by email to USTP.Fee.Guidelines@usdoj.gov. Alternatively, comments may be submitted by telefax to (202) 307-2397 or by mail to EOUST, 20 Massachusetts Ave., N.W., 8th Floor, Washington, D.C. 20530. To ensure proper handling of comments, please reference “Fee Guidelines” on all correspondence.

Tennessee restaurant chain Back Yard Burgers Inc. has filed a plan to exit chapter 11 protection under the control of its lender, private equity firm Pharos Capital Group LLC, Dow Jones DBR Small Cap reported today. In court papers filed on Wednesday, Back Yard said that Pharos and its affiliates would get 100 percent of the reorganized company's equity in exchange for providing $2.9 million in financing to keep the company afloat during the chapter 11 case.

Still in the midst of chapter 11 reorganization, Patriot Coal recorded a net loss of $215.9 million – more than four times what it lost in the same quarter last year, StateJournal.com reported yesterday. The company reported about a $448.6 million revenue in the third quarter, down about 24 percent from the same quarter last year. Patriot has been operating on $802 million in debtor-in-possession financing and has between 10,000 and 25,000 creditors.

Defunct Lehman Brothers Holdings Inc. and its affiliates had $14.3 billion in restricted cash on Sept. 30, including $10.9 billion of reserves for claims, Bloomberg News reported yesterday. Free cash and investments totaled almost $11 billion, according to a court filing. The claim reserves include $5.8 billion held for disputed amounts, Lehman said. The former investment bank plans two payments to creditors every year. The last payment was Oct. 1. Lehman, which four years after filing the biggest U.S. bankruptcy continues to sell assets to pay creditors, made a first payment of $22.5 billion in April and a second installment of $10.2 billion this month.

Ahern Rentals Inc. will retain sole control of its Chapter 11 bankruptcy case for another month amid continuing friction with lenders, the Las Vegas Review-Journal reported today. Bankruptcy Judge Bruce Beesley ordered Ahern to show the first draft of its reorganization plan to lenders in three weeks to try to push the case forward. The construction equipment leasing company filed the chapter 11 case in December but has made only halting headway in coming up with a financial blueprint to escape bankruptcy. The judge's action now sets the new deadline at Nov. 30, with the possibility of additional time to round up votes for a plan if it has officially put on the table.

The Dewey & LeBoeuf estate has begun to try to whittle away some of the thousands of claims asserted by aggrieved creditors hoping to recover at least a portion of what they say Dewey owes them, the American Law Daily reported today. To date, more than 2,100 proofs of claim have been filed against Dewey, which became the largest law firm in U.S. history to fail when it filed for chapter 11 protection on May 28. Those submitting the claims—which range from a low of $10 up to several million dollars—include vendors, former firm staffers, and landlords. Dewey’s advisers have said they believe that all told, the estate owes creditors $260 million in secured debt and $300 million $500 million more in unsecured claims. In a pair of filings made on October 26, the Dewey estate seeks to invalidate several dozen claims that they say are duplicative or were submitted after the September 7 deadline.

Nova Financial Holdings Inc. filed for bankruptcy after its banking unit was closed by regulators, making it the 47th bank to fail in the U.S. this year, Bloomberg news reported today. The chapter 7 petition for the bank holding company listed assets of as much as $100,000 and debt of as much as $50 million. Nova Bank had about $483 million in assets and $432 million in deposits as of June 30, according to a Federal Deposit Insurance Corp. statement. The Pennsylvania Department of Banking closed Nova Bank on Oct. 26, according to the FDIC, which became the receiver. The FDIC was unable to find another financial institution to take over the banking operations. Nova Bank’s failure will cost the Deposit Insurance Fund about $91.2 million, the FDIC estimated.

A123 Systems Inc., the electric-car battery maker that recently filed for bankruptcy, is seeking emergency approval to tap a $50 million loan provided by a Chinese auto parts maker to fund its chapter 11 case pending an auction of the clean energy firm, the Wall Street Journal reported yesterday. Lawyers for A123 Systems said on Sunday in a bankruptcy court filing that Chinese auto parts maker Wanxiang Group Corp. will provide the debtor-in-possession financing, replacing initial lender Johnson Controls Inc. Wanxiang's bankruptcy loan, which cuts the interest rate to 12 percent from 15 percent from Johnson Controls' initial offer, comes as a bidding war heats up between the two companies vying for the Massachusetts-based battery maker's assets.