All items from WSJ.com: Bankruptcy Beat

A bankruptcy judge Tuesday shut down an attempt by a former Dewey & LeBoeuf LLP executive to dismiss a lawsuit claiming he owes the defunct firm’s creditors $9.3 million.
Dewey’s bankruptcy trustee in March sued the executive, former Chief Operating Officer Dennis D’Alessandro, seeking the return of more than $9 million in salary, bonuses and other compensation that he received from 2008 until the firm’s 2012 collapse.
In filing the suit, Dewey’s trustee, Alan Jacobs, said the “astronomically generous” contract was atypical for the legal industry and “far above” the value of services he provided as COO. The suit seeks to recover the funds on the grounds that the payments were made while Dewey was unable to meet its other financial obligations.
Mr. D’Alessandro disagreed, arguing that the suit should be thrown out because he was not a so-called insider of the firm and that he was paid in the ordinary course of business in exchange for his services as a Dewey employee. He also argued that Dewey’s trustee can’t claw back payments from before 2010, based on previous statements from Dewey’s bankruptcy lawyers that it would be hard to prove the firm was insolvent in 2010.



Posted 1 hour 48 min ago

Cal Poly fullback Akaninyene Umoh, front left, congratulates linebacker Johnny Millard after Cal Poly’s 42-14 victory over Northern Colorado in November 2013.
David Zalubowski/Associated Press

A bankruptcy trustee’s quest to recoup money for investors defrauded by a Ponzi scheme has left a major California university in an uncomfortable situation.
For five years, the scoreboard at California Polytechnic State University’s football stadium has prominently displayed the name of Moriarty Enterprises—a onetime financial services firm run by Al Moriarty, a former Cal Poly athlete and longtime supporter of the university.
Now, as the San Luis Obispo Tribune reported, Mr. Moriarty is serving out a five-year prison sentence after pleading no contest to seven felony fraud charges tied to an illegal scheme that prosecutors say cost investors millions of dollars.



Posted 6 hours 14 min ago

MF Global’s creditors, who have waited nearly three years to get paid, will have to wait a little longer after a bankruptcy judge Monday held off approving its bid to repay them $295 million. Read the Daily Bankruptcy Review article in The Wall Street Journal.
(Daily Bankruptcy Review is a daily newsletter 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.”)
A federal judge’s recent ruling blocking Medicaid officials from cutting off a struggling nursing home could help troubled health-care facilities survive using bankruptcy, according to restructuring professionals. WSJ has the DBR article here.
The smooth ride for hedge funds holding certain claims tied to Lehman Brothers Holding Inc. hit a speed bump last month as a court ruling brought hedge funds their first losses, DBR reports via WSJ.



Posted 8 hours 1 min ago

Three-and-a-half years after Howrey LLP shut its doors, another 31 former partners of the bankrupt law firm have agreed to chip in money to pay back Howrey’s creditors.
In settlement papers filed Friday in U.S. Bankruptcy Court in San Francisco, Howrey trustee Allan Diamond says he’s reached deals to bring in close to $1.5 million from the batch of onetime equity partners. That’s on top of a nearly identical settlement reached in May with 60 ex-partners that raised $4.2 million for creditors.
The contributions, ranging from $3,532 to $200,000, claw back 16% of what partners earned between April 2010 and Howrey’s dissolution a year later—a period during which Mr. Diamond argues Howrey was insolvent.
“This one really takes us dramatically far down the road with respect to the former partners,” Mr. Diamond, a name partner at Texas firm Diamond McCarthy LLP, told Bankruptcy Beat on Monday. Settlement talks continue, he said, with a large group of lawyers who landed at Jones Day, and a handful of “stragglers” are also out there. (A Jones Day rep didn’t immediately respond to a request for comment Monday).



Posted 1 day 2 hours ago

The debt-stricken operator of an Indiana Toll Road filed for bankruptcy protection Sunday with a plan to get restructure some $6 billion debt by selling its assets or, alternatively, reorganizing its business. Read the Daily Bankruptcy Review article here.
(Daily Bankruptcy Review is a daily newsletter 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.”)
Power-plant owner Entegra Power Group LLC won swift confirmation Friday of a Chapter 11 plan that chops $750 million worth of debt from its $1.5 billion balance sheet. Read the DBR article via The Wall Street Journal.
The bidding is now open on Energy Future Holdings Corp.’s rights to Oncor, a Texas transmission business that’s going up for grabs in bankruptcy, DBR reports via WSJ.



Posted 1 day 7 hours ago

Next week in bankruptcy, MF Global Inc. will ask a bankruptcy judge to authorize a $295 million payout to its creditors.
On Monday, Judge Martin Glenn of the U.S. Bankruptcy Court in Manhattan will hear the request.
Creditors have waited nearly three years as all but a few individual brokerage and commodity customers received 100% of payments owed.
The bulk of the money is earmarked for unsecured creditors, who would receive a first distribution of about 20% of what trustee James W. Giddens has agreed to pay.  Holders of secured, administrative and priority claims that have been resolved will get 100% of their money all at once.
Mr. Giddens has also asked for permission to create a reserve fund of more than $400 million for unresolved claims and to put a cap on their amounts.
On Wednesday, Atlantic City, N.J.’s Revel Casino Hotel will head to the auction block after closing its doors early this month after no buyers immediately stepped forward to save the newest addition to the city’s famed boardwalk from its second bankruptcy in as many years.
Revel, a glittering $2.4 billion resort that made its boardwalk debut in 2012, last week announced a deal with Florida real estate developer Glenn Straub. Mr. Straub has offered $90 million in cash, which is subject to rival offers at the auction.
The winning bid is also subject to approval from Judge Gloria Burns at a sale hearing currently scheduled for Sept. 30.



Posted 4 days 4 hours ago

A new lawsuit seeks to hold M&I Bank, now owned by BMO Harris Bank, responsible for allegedly enabling Minnesota businessman Tom Petters to orchestrate a Ponzi scheme that cheated investors out of several billion dollars. The Wall Street Journal has the Daily Bankruptcy Review article here.
 (Daily Bankruptcy Review is a daily newsletter 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.”)
Less than two months after entering Chapter 11 protection, Eagle Bulk Shipping Inc. won court approval Thursday morning of a bankruptcy-exit plan that cuts $975 million in debt from its balance sheet. WSJ has the DBR article here.
LightSquared blew through $81.4 million in August, and Philip Falcone’s wireless venture has now lost $1.6 billion since it filed for bankruptcy in May 2012, DBR reports via WSJ.



Posted 4 days 8 hours ago

TelexFree LLC’s bankruptcy advisers will forgo more than $1 million in fees they charged during the short time they worked for the company, which has since been accused of operating a massive pyramid scheme.
To head off objections from the U.S. Securities and Exchange Commission, one of the many that have sued over the alleged fraud, attorneys at Greenberg Traurig and turnaround advisers at Alvarez & Marsal will dramatically slash the amount they charged TelexFree in the early days of its Chapter 11 case.
Court papers show that Greenberg will cut its request for $969,000 in fees to just $320,000, while its requested expenses of about $76,000 will remain the same. A&M’s roughly $876,000 in fees and expenses, meanwhile, will be cut to $435,000.
In return for these agreed-to reductions—which together total $1.09 million—TelexFree’s court-appointed trustee and the SEC won’t object as the firms seek bankruptcy-court approval for the fees (all debtor advisers in Chapter 11 must submit their fees for court approval). The SEC will also ask a district judge to lift the order freezing TelexFree’s assets so the firms can collect their fees.



Posted 5 days 5 hours ago

Associated Press/Elaine Thompson

As former customers keep a wary eye on the online version that new owners are planning for the Coldwater Creek women’s clothing line, the former company Wednesday won confirmation of its bankruptcy debt-payment plan. Read the Daily Bankruptcy Review article here.
(Daily Bankruptcy Review is a daily newsletter 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.”)
Smallpox drug maker Siga Technologies Inc. on Wednesday told a judge that without bankruptcy protection, it “would no longer be able to continue its operations,” DBR reports via WSJ.



Posted 5 days 7 hours ago

Thomas Jefferson School of Law

Thomas Jefferson School of Law is scrambling to restructure its debt after blowing a bond payment deadline.
The downtown San Diego private law school has disclosed in a financial filing that it failed to meet its entire debt obligations in June. But an agreement the school struck with creditors staves off doomsday at least until Oct. 17, while requiring it to come up with another $2 million.
School officials say they’re counting on reaching a restructuring deal with bondholders, who’ve agreed not to pursue legal remedies for the time being.
“As part of the negotiations, various potential structures and restructuring alternatives have been discussed,” the school said in a statement Tuesday evening following a report by the Above the Law blog about its borrowing woes.
“The parties have a mutual interest restructuring the law school’s debt in a way that will allow the school to remain in operation and prosper,” the statement said.



Posted 6 days 3 hours ago