All items from WSJ.com: Bankruptcy Beat

A federal bankruptcy watchdog filed a rare letter defending her personal role in negotiating settlements to resolve a professional fee dispute in GSC Group Inc.’s Chapter 11 case.
In an eight-page letter addressed to Judge Shelley C. Chapman of the U.S. Bankruptcy Court in Manhattan, U.S. Trustee Tracy Hope Davis responded to the “concerns” the court raised about the trustee’s role in a settlement process that has taken several twists and turns in recent months. (What Davis politely calls “concerns,” Reuters called “an unusually blistering diatribe” in which Judge Chapman accused Davis of behaving like a “first-year law student.”)
“The UST has endeavored to handle this matter with the utmost integrity and professionalism and in compliance with the court’s guidance and rulings,” Davis wrote. “The UST regrets any confusion that has arisen over the course of many hearings and conferences held in this case and hopes that the UST has satisfied the court’s concerns.”
U.S. trustees like Davis and others stationed around the country are responsible for monitoring all bankruptcy cases, individual and corporate, to ensure compliance with the Bankruptcy Code and to ferret out fraud or mismanagement. The trustees are an arm of the U.S. Department of Justice, and their governmental status and lack of financial stake in bankruptcy cases generally give them prominent standing before a bankruptcy judge.

Associated Press

Gold bars and coins from the SS Central America, a mail steamship, sunk in a hurricane in 1857.

The Columbus Dispatch newspaper says an Ohio lawyer orchestrated an involuntary bankruptcy against Columbus Exploration in an effort to prevent a state receiver from taking control of the deep-sea exploration company.
The paper, along with an Ohio businessman, sunk $1.5 million into treasure hunter Tommy Thompson’s bid to salvage tons of gold and silver from a wrecked steamship off the Carolina coast. It’s been fighting with the treasure hunter for years.
“Richard Robol orchestrated this bankruptcy” in conjunction with Columbus Exploration “for the purpose of preventing the appointment of a receiver,” lawyers for the Dispatch and former Ohio Co. President Donald Fanta said in court papers. The Dispatch said Robol “timed the filing of the petition to make sure it occurred before the state court issued its decision on the Dispatch parties’ pending receivership motion.”

John Paulson‘s hedge fund has placed real-estate investment trust MSR Hotels & Resorts Inc., which recently sold a group of its affiliated resorts for $1.5 billion at bankruptcy sale, into Chapter 11 in a bid to stymie a multimillion-dollar lawsuit filed by Five Mile Capital Partners, Daily Bankruptcy Review reports.
(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.”)
American Airlines parent AMR Corp. has reached a $24.9 million settlement with the Federal Aviation Administration over alleged safety and maintenance infractions, The Wall Street Journal reports.

Wayne Parry/Associated Press

A federal bankruptcy watchdog is objecting to casino owner Revel AC Inc.’s restructuring plan, taking aim at “expansive” provisions meant to shield everyone from lenders to equity holders from liability. Read the Daily Bankruptcy Review article 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.”)
The former owner of Maui’s Grand Wailea Resort and California’s La Quinta Resort filed for bankruptcy, Bloomberg reports.