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The publisher of the Reader's Digest magazine said that it expects to emerge from bankruptcy by the end of July after a bankruptcy court approved its reorganization plan, Reuters reported on Friday. The Reader's Digest Association Inc. and its affiliates filed for chapter 11 protection for the second time in less than four years in February, citing a greater-than-expected decline in the media industry. The publisher, which had earlier filed for bankruptcy in 2009, will see its debt reduced by more than 80 percent to about $100 million under the restructuring plan, the company said. It will also convert about $465 million of secured notes to equity.

Mercantile Bancorp Inc., an Illinois bank holding company, sought bankruptcy protection with an agreement to sell virtually all its assets to United Community Bancorp Inc. for about $22.3 million, Bloomberg News reported today. The Quincy, Ill.-based company listed debt of more than $50 million and assets of less than $50 million in chapter 11 documents filed yesterday. Mercantile was forced to seek bankruptcy protection from creditors after “the precipitous decline in the financial markets during 2007 and 2008, foreclosure rates, delinquency rates and default rates” at the six subsidiary banks caused them to suffer “tremendous losses,” Chief Executive Officer Lee Roy Keith said in an affidavit. The company sold three of those bank subsidiaries in 2009 for $53.6 million, in an attempt to “right the ship.” The efforts were unsuccessful and its Heartland Bank and Royal Palm Bank were closed by state regulators in July 2012 and the Federal Deposit Insurance Corp. took over as receiver.

Cengage Learning Inc., the struggling textbook publisher owned by private-equity firm Apax Partners, is preparing to file for bankruptcy protection in the coming days, the Wall Street Journal reported today. Cengage, which employs about 5,400 people, is currently negotiating a pre-packaged bankruptcy restructuring with senior creditors to rework more than $4 billion in debt, and plans to seek chapter 11 court protection by July 5. Cengage plans to skip a $225 million debt payment due that day. Apax also holds roughly $800 million in Cengage debt alongside a host of other investment firms, and will likely share ownership of the company after it emerges from bankruptcy proceedings.

Pfizer Inc.’s non-operating Quigley Co. can end almost nine years in bankruptcy under a plan that will resolve most asbestos claims against the world’s largest drugmaker and its former maker of insulation products, Bloomberg News reported yesterday. Bankruptcy Judge Stuart Bernstein yesterday approved a chapter 11 plan under which Pfizer will contribute assets worth $964 million. He rejected a prior plan almost three years ago, saying that Pfizer was improperly using Quigley’s bankruptcy to shield itself from asbestos claims.

Bankruptcy Judge Martin Glenn yesterday approved a settlement in which the U.S. government-owned Ally Financial Inc., formerly the finance arm of General Motors Co., will pay $2.1 billion to its bankrupt unit Residential Capital LLC, Reuters reported. Judge Glenn also said that he will unseal a report by a bankruptcy examiner probing Ally's role in ResCap's collapse. The report had been sealed as the parties hashed out a settlement. The deal is a key step in ResCap's eventual exit from chapter 11 protection. The settlement also will help Ally focus on its core business of auto lending and on repaying the U.S. government roughly $10 billion outstanding on a $17 billion loan for a bailout during the financial crisis.

The Institute for the Advancement of the American Legal System (IAALS) and the University of Denver recently issued a report titled "A Credit to the Courts: The Selection, Appointment and Reappointment Process for Bankruptcy Judges." The report said that U.S. bankruptcy courts have 351 authorized bankruptcy judgeships, along with an additional 37 retired-recalled bankruptcy judges. The report explores the bankruptcy judge selection process and the variations in that process across the circuits. In particular, the IAALS study highlights aspects that work well within the system and identifies areas where further study may be warranted. Some of these areas of concern include the length and secrecy of the selection process and a perceived lack of diversity, especially regarding minorities and women, among bankruptcy judges. To read the full study, please click here: http://iaals.du.edu/images/wygwam/documents/publications/A_Credit_to_th…

Eastman Kodak Co.'s disclosure statement was approved by Bankruptcy Judge Allan Gropper yesterday, bringing the former photography company one step closer to exiting from chapter 11 protection to restructure as a commercial imaging business, Reuters reported yesterday. Kodak declared bankruptcy in January of 2012 because of high pension costs and after falling many years behind rivals in embracing digital technology in its photography business. It has since sold a variety of assets, and will emerge from chapter 11 as a mainly commercial imaging-focused enterprise. Last week, the company announced it had reached an $895 million financing deal with JPMorgan Chase & Co., Bank of America Corp. and Barclays Plc.

An increasingly vocal chorus of current and former U.S. regulators says that the biggest banks still have not provided adequate plans to safely wind down in bankruptcy and may need to be restructured to reduce the risk they pose to the financial system, Bloomberg News reported today. Jim Wigand, a Federal Deposit Insurance Corp. official responsible for planning for the potential failures of big banks such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc., said that none have yet been able to draw up bankruptcy plans that wouldn’t threaten to detonate the financial system. The plans, known as “living wills,” were a core demand of the 2010 Dodd-Frank Act overhaul of financial oversight, and it gave regulators the authority to require systemically risky banks to restructure if their plans aren’t “credible.” Whether a global financial giant is able to go through an orderly bankruptcy using a living will is still “an open question,” Wigand said. The 11 largest banks filed the first draft of their living wills last year. The banks, which included Bank of America Corp., Barclays Plc and Deutsche Bank AG, are required to file new versions of their living wills on Oct. 1. Another tier of banks with smaller U.S. nonbank holdings, including Wells Fargo & Co. and HSBC Holdings Plc, must file their first plans by July 1.

Bankruptcy Judge Sean H. Lane yesterday approved Arcapita Bank's $175 million bankruptcy loan from Goldman Sachs Group Inc. to replace existing financing from Fortress Investment Group LLC, Dow Jones Daily Bankruptcy Review reported today. Judge Lane's approval on the financing allows Arcapita to pay off $105 million still owed to Fortress. Later, Arcapita can convert the loan into a $350 million financing package also being provided by Goldman.

The distributor of such cable-television shows as “Inside the Actors Studio” and “Live from Lincoln Center” has sought chapter 11 protection, the Wall Street Journal reported yesterday. Cable Ready Corp., of Norwalk, Conn., filed its chapter 11 petition on Friday. Founded in 1992, Cable Ready sells TV programs to cable and satellite networks around the world as well as to airlines and cruise ships. It also develops shows and provides TV-consulting services. Cable Ready reported $3.17 million in assets and $4.46 million in debts in its bankruptcy petition. Its debt load includes $1.47 million owed to lender Norwalk Bank and Trust.