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RoomStore Inc. wants to pull the plug on its chapter 11 case and bring in a trustee to liquidate its remaining assets after sparring with its bankruptcy lender, Dow Jones DBR Small Cap reported today. The defunct furniture chain, which has already sold off its operating assets in a series of going-out-of-business sales, is asking a judge to convert its case to chapter 7 liquidation. Last week, the company received three letters from lender Salus Capital Partners LLC alleging events of default and outlining Salus's plans to take back its collateral, which amounts to substantially all of RoomStore 's remaining assets.

Bankruptcy Judge Kevin Carey has approved a plan by Tribune Co. to reorganize its debts and emerge from bankruptcy centered on the transfer ownership of the Chicago media company to a group of senior creditors led by Oaktree Capital Management, the Los Angeles Times reported today. The approval will allow the Federal Communications Commission to move forward on the company’s application to transfer its TV and radio broadcast licenses to the new owners — the last big hurdle in a case that has dragged on for 3½ years. Tribune also will be able to accelerate work on other administrative and financial matters that need to be completed before it can emerge from bankruptcy. Those include reshaping its corporate structure and obtaining $1.1 billion in new debt financing and a $300-million line of credit.

Solar panel maker NovaSolar Inc. will have to prove that it deserves to remain in chapter 11 after allegedly failing to file certain documents, the Deal Pipeline reported yesterday. Bankruptcy Judge Charles Novack is scheduled on Aug. 2 to consider dismissing or converting the case to a chapter 7 liquidation. The court's clerk, Gloria L. Franklin, on July 10 moved the court to issue an order forcing NovaSolar to show cause why it should remain in chapter 11. In her report, Franklin said that the debtor has failed to file the requisite documents, including certain schedules. Judge Novack approved the motion on July 11.

The United Mine Workers (UMW) is concerned about a coal company's bankruptcy reorganization plan and its impact on its members, the Associated Press reported on Saturday. The UMW's concern involves Patriot Coal Corp., which filed for chapter 11 protection on July 16 in New York as it deals with reduced demand for coal and rising costs. In its bankruptcy filings, Patriot complained of "legacy costs" such as health-care benefits and pension payments. UMW lawyers are seeking to have the reorganization case moved from New York to southern West Virginia, where they say such issues can be more properly handled.

The trustee who is winding down Howrey LLP is taking his first step toward staking a claim in the profits from continuing work that the defunct law firm's former partners took with them to their new firms, the Wall Street Journal reported today. Bankruptcy trustee Allan B. Diamond has won a federal judge's permission to subpoena, if necessary, the 70 law firms to which more than 200 Howrey partners jumped ship as the Washington, D.C., firm that specialized in corporate litigation collapsed last year. The order issued last week by Bankruptcy Judge Dennis Montali marks the opening of an investigation into the amount of compensation Howrey's creditors may be entitled to from the unfinished business that the partners started at Howrey and took to their new firms.

Unsecured creditors want control of RoomStore Inc.'s bankruptcy case wrested from the company, alleging that the liquidating furniture retailer used the sales tax it collected from customers to pay its own expenses, Dow Jones DBR Small Cap reported today. The unsecured creditors' committee said that both it and bankruptcy lender Salus Capital Partners LLC "have lost all faith and confidence in the abilities of the board to manage the debtor's remaining affairs," citing a stream of "indiscretions" that the creditors say have plunged the case into chaos. Lender Salus has declared a default under the loan that was keeping RoomStore afloat during its case, according to the creditors, and is poised to simply collect its collateral-the remaining assets of the debtors-and walk away.

A $50 million insurance policy is emerging as a key factor in efforts to resolve the bankruptcy of defunct law firm Dewey & LeBoeuf and avoid years of costly litigation, Reuters reported on Friday. The policy, taken out by Dewey in October 2011, covers claims of misconduct against former chairman Steven Davis and a handful of other former top executives at the firm, according to three former Dewey partners. As bankruptcy negotiations proceed, the estate, former partners and creditors are sorting out how the policy affects their different interests. In a proposal put forward last week by the firm's estate, former partners were asked to contribute between $25,000 and $3 million each toward a $103.6 settlement pot and to forfeit any legal claims against the defunct firm and its officers. In exchange, the partners would be released from liability for the firm's $315 million debt.

The official winding down Howrey LLP is taking his first step toward staking a claim in the profits from ongoing work that the defunct firm's former partners brought with them to their new firms, Dow Jones DBR Small Cap reported today. Bankruptcy trustee Allan B. Diamond this week won a judge's permission to subpoena 70 law firms that hired more than 200 Howrey partners and to start investigating the transfer of Howrey clients to those firms as well as the compensation the firms received for representing those clients.

Bankrupt law firm Dewey & LeBoeuf's plan to pay bonuses to its remaining employees has drawn objections from U.S. Trustee Tracy Hope Davis, who said that the plan might not be cost effective, Reuters reported yesterday. Davis said in court papers that the proposed plan did not provide enough information to determine if the cost of retaining employees was economically feasible. The law firm is seeking approval from the U.S. Bankruptcy Court in Manhattan to pay $450,000 to its 52 remaining employees who collect money and bill former clients. The trustee also said the plan could not be justified because the firm is no longer operating as a normal business.

Residential Capital LLC, the bankrupt mortgage lending unit of Ally Financial Inc, has asked a judge for permission to make $14.9 million in incentive payments to hold onto 191 key employees, Reuters reported today. About $4.1 million would go to 17 senior executives, not including Chief Executive Officer Thomas Marano, and $10.8 million to 174 other employees, according to a court filing on Tuesday. These recipients together comprise roughly 5 percent of ResCap's 3,625-person workforce.