All items from WSJ.com: Bankruptcy Beat

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U.S. Supreme Court Building

The nation’s highest court won’t review the conviction of Tom Petters, whose business empire once encompassed Polaroid and Sun Country Airlines before his arrest on charges that he ran a massive Ponzi scheme.
The Supreme Court’s denial of Petters’s request was made public Tuesday, the Associated Press reported. The court’s decision marks the end of the road for Petters, who hasn’t wavered from his stance that he is innocent of the fraud and other charges a federal court found him guilty of in 2009. (Petters recently told Twin Cities Business that he relied on his employees to run the businesses that were eventually found to be fraudulent and that when he saw red flags, he tried to take appropriate steps, like requesting an audit.)

Reuters

A man moves boxes out of the offices of Dewey & LeBoeuf.

Curious what happens to a client whose law firm is on the brink of collapse? Just ask paper maker NewPage Corp., which saw a hearing on a key issue in its Chapter 11 case pushed back because of the “extraordinary difficulties” its lawyers at Dewey & LeBoeuf have faced in recent weeks.
The head of Dewey’s bankruptcy team, prominent attorney Martin Bienenstock, is representing NewPage in its bankruptcy case. The hot issue in recent weeks has been whether NewPage’s unsecured creditors can file a lawsuit to challenge a 2007 deal that they say loaded up the company with debt. If the unsecured creditors win the right to file suit and are successful, they could free up more cash for themselves when it comes time for NewPage to exit Chapter 11 protection.

Ally Financial Inc.’s troubled mortgage subsidiary filed for Chapter 11 bankruptcy early Monday, potentially paving the way for Ally to sever itself from substantial litigation that has been a drag on its other operations and prevented it from repaying the remainder of its government bailout. Read The Wall Street Journal here.
Turnaround firms are adapting to a slowdown in traditional corporate restructurings by broadening their capabilities and reach, a trend that’s already sparked one merger and which insiders say could spark more. Read the Daily Bankruptcy Review story here.
(Daily Bankruptcy Review and DBR Small Cap are daily newsletters with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
Once one of New York’s biggest law firms, Dewey & LeBoeuf LLP is on the brink of collapse following partner defections, disappointing revenue and a compensation scheme that awarded nearly one-third of the partnership with pay guarantees at the expense of rank-and-file partners, WSJ reports.

Houghton Mifflin Harcourt Publishers Inc. has formed an agreement with a majority of its creditors to eliminate $3.1 billion of debt, marking the publisher’s latest effort to tackle a heavy debt load in the face of weak textbook demand. Read the Dow Jones Newswires story here.
The founder of a failed hedge-fund management firm who fled to Angola in the wake of the collapse of brokerage Refco Inc. owes $263 million to investors that were left holding the bag, a federal judge said Thursday. Read the Daily Bankruptcy Review story here.
(Daily Bankruptcy Review and DBR Small Cap are daily newsletters with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
Beleaguered law firm Dewey & LeBoeuf LLP is losing another member of its leadership team, as bankruptcy specialist Martin Bienenstock plans to move his practice to Proskauer Rose LLP, reports The Wall Street Journal.