All items from WSJ.com: Bankruptcy Beat

Teen-focused clothing retailer Love Culture Inc. sought Chapter 11 protection Wednesday, citing an overexpansion that left the chain with weakened finances. 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.”)
A bankruptcy judge put Crumbs Bake Shop Inc. on the path to a quick sale, giving the cupcake chain hope that it will reopen the doors at many locations. WSJ has the DBR article here.
Canadian steelmaker Essar Steel Algoma Inc. filed for Chapter 15 protection in the U.S. with more than $1 billion in debt, Bloomberg reports.



Posted 1 week 1 day ago

Melanie Cohen

Since emerging last week as Crumbs Bake Shop ’s would-be savior, investor Marcus Lemonis has vowed to relaunch the cupcake chain in some fashion and hire back laid off employees.
But as Crumbs’s bankruptcy kicks off this week, it’s already clear that many of the chain’s recently shuttered cupcake shops will remain dark for good.
In a request made Friday in U.S. Bankruptcy Court in New Jersey, Crumbs asks a court’s permission to reject 21 leases that it says “represent an unnecessary expense and contribute no value” to its bankruptcy estate. Through bankruptcy, companies are often allowed to ditch leases and other contracts to help lessen debts.



Posted 1 week 2 days ago

Energy Future Holdings Corp. has dropped out of the bidding on Optim Energy’s Twin Oaks power plant. 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.”)
Bernard L. Madoff trustee Irving Picard filed an amended lawsuit against Mr. Madoff’s two sons, The Wall Street Journal reports.
According to WSJ, Portugal Telecom SGPS SA said it didn’t get a €847 million ($1.15 billion) debt repayment from a unit of Espírito Santo International SA.



Posted 1 week 2 days ago

Dewey’s former chairman, Steven Davis, second from right, and former finance chief, Joel Sanders, third from right, arriving in court in March.
Reuters

The implosion of New York law firm Dewey & LeBoeuf LLP was not a result of intentional wrongdoing by firm management, say lawyers for three former Dewey executives seeking to dismiss criminal charges against their clients.
In court filings, lawyers for former Dewey chairman Steven Davis, former chief financial officer Joel Sanders and former executive director Stephen DiCarmine said their clients lacked both the financial know-how and the intent to perpetrate the alleged accounting fraud that led to their indictment.
The papers, filed on Friday in state supreme court in Manhattan, provide the first glimpse of a potential defense strategy for the three leaders, who Manhattan prosecutors say cooked the firm’s books in a scheme to conceal its deteriorating financial condition.



Posted 1 week 3 days ago

In the niche practice of law-firm bankruptcies, Texas law firm Diamond McCarthy LLP has earned a reputation for its willingness to sue other lawyers.
Now, the firm is suing a lawyer it knows well—its former partner Sheila Gowan, who Diamond McCarthy says unjustly pocketed a $1.4 million fee for her work as Dreier LLP’s bankruptcy trustee.
Ms. Gowan, a former federal prosecutor in New York, began unwinding Ponzi-scheme operator Marc Dreier’s law firm in December 2008 while working as a partner at Diamond McCarthy. She moved to Sadowski Fischer PLLC in February 2013 and took the assignment with her, concluding work on the case in May when Dreier’s creditor-repayment plan went into effect.
In a suit filed earlier this month in Texas state court, Diamond McCarthy says it is entitled to much of the $1.4 million because its partnership agreement requires all fees earned by its lawyers, including as a bankruptcy trustee, to flow back to the firm. The firm says it brought the suit “with considerable regret and only after potential avenues of compromise reached an impasse.”
Diamond McCarthy managing partner Allan Diamond declined to comment Tuesday, as did Ms. Gowan.



Posted 1 week 3 days ago

Philip Falcone‘s LightSquared has reached a deal on a restructuring plan that has the support of Dish Network Corp. Chairman Charlie Ergen, its top secured lender. The Wall Street Journal has the Daily Bankruptcy Review article here.
The financing company behind four large crude oil carriers filed for Chapter 11 bankruptcy protection Monday to restructure its balance sheet following the loss of contracts to carry product for BP PLC’s maritime unit. Read the DBR 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.”)
The Houston Rockets and the Houston Astros need a new owner for the struggling television channel that broadcasts their games, and they want to keep the names of potential purchasers a secret for now. Read the DBR article via WSJ.



Posted 1 week 3 days ago

A Coldwater Creek store in downtown Seattle.
Associated Press/Elaine Thompson

Last week’s auction of Coldwater Creek’s store leases raised an extra $1.7 million for creditors of the bankrupt women’s clothing chain. But who bought them?
Court papers show that fellow retailers J. Jill, Forever 21, Lane Bryant and Maurices were among the winning bidders at the July 8 auction.
J. Jill Group Inc., a women’s clothing chain that targets the same demographic as Coldwater Creek did before its shutdown this spring, scooped up leases to four stores for $125,000. The leases are to stores located in Arlington, Texas; Hunt Valley, Md.; Sacramento, Calif.; and Southlake, Texas.



Posted 1 week 4 days ago

Philip Falcone‘s Harbinger Capital Partners is suing the federal government for allegedly reneging on an agreement regarding wireless venture LightSquared. The Wall Street Journal has the Daily Bankruptcy Review article here.
Days after abruptly closing its dozens of cupcake stores, Crumbs Bake Shop Inc. filed for Chapter 11 protection Friday evening with plans to sell itself to an investor group that includes CNBC host Marcus Lemonis and Dippin’ Dots owner Fischer Enterprises. Read the DBR story via WSJ.
(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.”)
The Trump Plaza casino in Atlantic City, N.J., is expected to close in September, the Associated Press reports.



Posted 1 week 4 days ago

This week on The Broke and the Beautiful, there may soon be some sweet news for Crumbs Bake Shop , and a jury said the Dodgers were partially responsible for the beating of a San Francisco Giants fan. Also, Joe Francis won’t give up the keys to two fancy cars.



Posted 2 weeks 16 hours ago

Energy Future Holdings Corp. will on Friday present to the bankruptcy court a comprehensive report on the status of negotiations on the agreement that would form the backbone of its Chapter 11 plan.
The Friday hearing had originally been set as the date when Energy Future would press for court approval of the restructuring support agreement. But that has been delayed to allow negotiations to continue, according to Energy Future.
The restructuring support agreement locks in the support of top-ranking lenders on the Texas Competitive side of the business and others for Energy Future’s overall restructuring strategy. The company wants to split itself in two to appease as many creditors as possible without triggering a massive tax bill.
Although Judge Christopher Sontchi of the U.S. Bankruptcy Court in Wilmington, Del., will no longer be reviewing the agreement for approval Friday, the hearing will provide a critical update on the status of those negotiations.
On Monday, the trustee winding down New England Compounding Center, the Massachusetts pharmacy responsible for a deadly meningitis outbreak in 2012, will present a $100 million settlement for bankruptcy court approval.
Under the settlement, New England Compounding, its insurers and one of the company’s affiliates will contribute more than $100 million to a compensation fund to be distributed to those who died or suffered significant injuries after receiving injections of tainted steroids traced to the pharmacy.



Posted 2 weeks 19 hours ago