All items from WSJ.com: Bankruptcy Beat

Student at Corinthian Colleges WyoTech technical school campus in Laramie, Wyo.
Mead Gruver/Associated Press

Thirteen U.S. Senate Democrats are pushing Education Secretary Arne Duncan to wipe out federal loans given to students who enrolled in a troubled for-profit college that’s being dismantled amid federal and state investigations.
Sen. Elizabeth Warren (D., Mass.) and 12 other Democrats, sent a letter Tuesday urging Mr. Duncan to “immediately discharge” federal student loans for students at schools owned by Corinthian Colleges Inc., which reached an agreement with the federal government over the summer to dissolve itself.



Posted 1 week 2 days ago

Lehman Brothers says a former trader received his entire $84 million bonus in 2008. Now the failed bank claims he is asking for it again. 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.”)
According to WSJ, Brazilian power utility Eneva SA filed for bankruptcy protection in Rio de Janeiro.
The former head of the firm behind the chemical spill that contaminated a large portion of West Virginia’s water supply faces criminal charges accusing him of lying in the company’s bankruptcy case in a bid to shield his assets from litigation, DBR reports via WSJ.



Posted 1 week 2 days ago

The leader of Bernard Madoff’s broker-dealer business was sentenced to 10 years in prison on Monday for aiding one of the largest financial frauds in U.S. history with “his meticulous bookkeeping and averted eye,” reports 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.”)
Former customers of Peregrine Financial Group Inc., the Iowa brokerage firm that collapsed after the exposure of its founder’s fraud, are in line to recover more of the $394 million they are owed, reports DBR’s Jacqueline Palank in WSJ.
Banco Espírito Santo SA’s former chief executive Ricardo Salgado has defended his management of Portugal’s second-largest lender, blaming the central bank, the government and the media for unleashing a chain of events that led to the bank’s collapse in his first appearance since the bank failed in August, reports WSJ.



Posted 1 week 3 days ago

The Wall Street Journal reports that teen retailer Delia’s filed for Chapter 11 bankruptcy protection. The seller of junior clothing and accessories last week announced plans to shut down, one of several mall-based retailers struggling with less traffic and slowing sales, as Daily Bankruptcy Review reports 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.”)
A group of restructuring pros on Monday released their recommended fixes to the U.S. bankruptcy code. DBR’s Katy Stech has the story here. You can read more about the proposed overhaul here as well as see what the authors didn’t seek to fix here.



Posted 1 week 4 days ago

While restructuring professionals have proposed some interesting changes to the bankruptcy code, it’s also striking what their 370-page report leaves out. Here are some hot topics in the bankruptcy world that wouldn’t be affected:
Distressed-Debt Trading
The report, from the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11, doesn’t recommend that investors who profit from the lucrative world of distressed-debt trading reveal who they are and what they paid for that debt. Distressed-debt traders were worried that any new disclosure requirements would disrupt the secrecy they get under existing bankruptcy law. And more important, if a bankrupt company knew what an investor paid for a claim—say, a mere 10 cents on the dollar—that company’s lawyer might push harder for the investor to accept a smaller repayment. Investors had warned that such changes could drive them away and make it tougher for a bankrupt company’s creditor—perhaps a cash-strapped supplier or an employee—to sell their claims.
‘Too Big to Fail’



Posted 1 week 4 days ago

The American Bankruptcy Institute unveiled its long-awaited Chapter 11 reforms Monday morning, which aim to help struggling businesses but also propose to take away perks for lenders who extend bankruptcy loans and to remove protections for some investors who profited from leveraged buyouts. Wall Street Journal Reporter Katy Stech read the 370-page report (read her story here) so you don’t have to. Here’s what the changes—if unaltered and passed someday by federal lawmakers—would mean:
Lenders to Bankrupt Companies
Recommended changes would shift power away from a company’s creditors in order to give a reorganizing company a better shot at survival. Changes to the law would make it easier for a big company to force lenders and other creditors to accept a reorganization plan even if those groups wouldn’t be fully repaid right away.



Posted 1 week 4 days ago

This week on The Broke and the Beautiful, Teresa Giudice is suing her ex-lawyer, alleging it’s his fault she’s going to prison.



Posted 2 weeks 6 min ago

The Trump Taj Mahal Casino Resort in Atlantic City, N.J.
Wayne Parry

A courtroom showdown over the fate of Trump Entertainment Resorts Inc. is scheduled for Thursday—the day before the deadline originally set for the closure of the company’s Trump Taj Mahal casino on the Atlantic City, N.J., boardwalk.
A Wilmington, Del., bankruptcy judge has ordered Trump Entertainment lawyers to prove that they have a realistic game plan to keep the Taj Mahal from closing. Without one, the company’s case could be pushed into a Chapter 7 liquidation.
The company has pushed back the target closing date to Dec. 20 from Dec. 12, citing talks that could save the casino and hotel.



Posted 2 weeks 2 hours ago

American Laser Skincare filed for bankruptcy liquidation Thursday, weeks after closing the doors of its clinics in a move that touched off an eruption of customer complaints online.
Papers filed in the U.S. Bankruptcy Court in Wilmington, Del.,  say there’ll be nothing for unsecured creditors, including, presumably, customers who paid in advance for their Botox and other beauty treatments.
“How do you close your doors without any warning to your clients or employees?! It’s just shameful business practice! I’m out over $3000!” wrote one unhappy patron in a posting on the company’s Facebook page.
The Farmington Hills, Mich., company filed for bankruptcy along with dozens of state affiliates, estimating assets of less than $50,000 and debts topping $100 million.



Posted 2 weeks 4 hours ago

Teen clothing retailer Delia*s Inc. will file for bankruptcy and shut down after it couldn’t find a merger partner or another source of money to survive after years of steady losses, The Wall Street Journal reports. The retailer’s shelves could start emptying as early as Friday in going-out-of-business sales.
(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.”)
Retailer Deb Shops filed for Chapter-11 bankruptcy protection on Thursday, abandoned by its owners and likely headed into liquidation, The Wall Street Journal reports. The chain’s 295 stores, mostly located in malls, would need to find a buyer soon to stay alive.
Former IMF head Dominique Strauss-Kahn’s bankrupt hedge fund never made a trade, The Wall Street Journal reports.



Posted 2 weeks 5 hours ago