The jury verdict Friday that found Ira Rennert and his firm liable for $118 million from Magnesium Corp. of America’s 2001 bankruptcy stands as a stark warning for insiders to tread carefully when extracting money from a company, lest they land on a particularly pricey hook if it ends up insolvent, experts said.
The first stage of the U.S. Securities and Exchange Commission’s hard-fought battle against a pair of Texas tycoons came to a close Thursday when a New York federal judge imposed a nearly $300 million judgment against Sam Wyly and the estate of his late brother Charles Wyly, but a new front now opens as the agency looks to collect on the tab amid likely appeals and a bankruptcy proceeding.
The Federal Deposit Insurance Corp. stepped in on Friday and took over Doral Financial Corp., handing over the operations of Puerto Rico’s only community bank to Banco Popular in a deal that will cost the U.S. regulator about $749 million.
Skadden Arps Slate Meagher & Flom LLP and hedge fund Tennenbaum Capital Partners LLC on Thursday pushed back against fraud accusations by the founder of defunct packaging company Radnor Holdings Corp., with the law firm calling him a “serial and vexatious litigant” whose actions are sanctionable.
Junior bondholders of Energy Future Holdings Corp. told a Delaware bankruptcy judge on Thursday they were on board with the energy giant's proposal to repay $750 million of their notes but said it should be approved only after a fight with senior creditors is defused.
Insurer Mid-Continent Casualty Co. must pay “advertising injury” damages in an intellectual property suit brought by an architectural firm against a bankrupt homebuilder that allegedly used its designs without permission, the Fifth Circuit said on Thursday.
The New York bankruptcy court's latest judge hire, a Debevoise & Plimpton LLP attorney whose name was revealed on Friday, will take the seat vacated by a judge who, like him, worked on the American Airlines Inc. bankruptcy last spring — and he'll be the court's second new judge this month.
Stan Lee Media Inc. urged the U.S. Supreme Court in a filing made public Friday to revive its suit seeking profits and ownership rights to Spider-Man and other characters created by its ex-president Stan Lee, arguing that the Ninth Circuit’s dismissal deviated from Twombly.
RadioShack Corp. got the blessing of a Delaware bankruptcy judge on Friday for a $2.4 million sale that sees the electronics icon hand over leases for a collection of its shuttered stores to cellphone retailer Spring Communications Holding Inc.
The Securities Industry and Financial Markets Association on Wednesday asked the Fifth Circuit to find that the extender statute for certain Federal Deposit Insurance Corp. claims doesn’t preempt state statutes of repose, in a $2.1 billion residential mortgage-backed securities case targeting Goldman Sachs & Co. and several other banks.
A New York federal jury found Ira Rennert liable on Friday for contributing to Magnesium Corp. of America’s 2001 bankruptcy, ordering the billionaire industrialist and his firm to pay $118 million in damages for taking shareholder dividends that allegedly left MagCorp too weak to survive.
University General Health System Inc., a health care system beset by creditor collection efforts at its flagship Houston hospital, filed for bankruptcy protection on Friday after a series of failed acquisitions, burdensome managed care deals and allegedly inflated revenue estimates.
A Delaware bankruptcy judge on Thursday refused to toss a suit seeking $10 million from Phoenix Payment Systems Inc. in a dispute over software rights, but effectively capped the rival card transaction company's claim against the debtor at $1 million.
A New York federal judge on Thursday ordered former Michael’s Stores Inc. Chairman Sam Wyly and the estate of his late brother Charles Wyly Jr. to pay about $299.3 million to federal regulators for engaging in securities fraud, after the parties spent months battling over the amounts.
The U.S. arm of bankrupt Nortel Networks Corp. revived its opposition Wednesday to late severance claims from ex-employees of its Canadian parent, arguing it has evidence the workers were aware of the deadline but believed they had no claims against American units.
A Puerto Rican appeals court on Wednesday overturned a lower court decision that awarded Doral Financial Corp. a $229 million tax refund, handing a blow to the beleaguered bank.
Owners of the troubled utility plant built to power the Revel Casino Hotel urged a judge on Wednesday to order the defunct resort into liquidation, claiming it cannot be trusted to treat creditors fairly after electing to “throw in the towel” and sell itself for a lowballed $82 million.
The Texas State Bar Commission for Lawyer Discipline has accused a former partner with Houston-based law firm now known as Orlando & Orlando LLP of ethics violations for signing his client’s signature to documents without his knowledge, the second legal action taken against attorney Calvin C. Braun stemming from a 2010 Chapter 11 suit.
An investment fund controlled by a Dutch investor must pursue its breach of contract claims against Carlyle Investment Management LLC in Delaware state court even though the fund never signed the contract requiring the dispute to take place there, the Third Circuit ruled Wednesday.
LightSquared Inc. creditor and preferred stockholder Solus Alternative Asset Management LP floated a rival Chapter 11 plan Thursday along with $742 million in debtor-in-possession financing to compete with the debtor’s reorganization strategy supported by its controlling stakeholder, Phillip Falcone’s Harbinger Capital Partners LLC.
In light of a Florida bankruptcy court decision in the case of Bayou Shores SNF LLC, health care entities may attempt to duplicate a strategy that would buy them time to turn around troubled facilities if faced with the crushing financial impact of Medicare and Medicaid termination, say attorneys with McGuireWoods LLP.
Oil companies in need of funding for capital expenditures will increasingly find alternative financing structures attractive as traditional sources of credit tighten. Royalty-based investments may become even more popular than in the past due to their flexible structure, ability to target specific assets and potential bankruptcy advantages to investors, say attorneys at Jones Day.
A lender’s expectations about the efficacy of protections designed into a loan structure may be unreasonable. Or, a borrower may simply ignore loan covenants or corporate requirements. In either case, the result could be a bankruptcy filing by an entity that was thought to be bankruptcy-remote, says Sarah Kam of Reed Smith LLP.
Thanks to Judge Chris Klein’s recently issued confirmation opinion in Stockton’s bankruptcy case, no longer will cities be able to avoid dealing with pensions in California out of a fear of facing off with CalPERS and its massive bank account, says Karol Denniston of Squire Patton Boggs LLP.
All too often, the appropriate methodology for a cramdown interest rate in Chapter 11 is a battle between the debtor and secured creditors, with the formula approach, also termed the “prime plus” approach, being one of the most dangerous for creditors, say Berger Singerman LLP attorneys Lewis Killian Jr., a former bankruptcy judge, and Ashley Dillman Bruce.
The Bankruptcy Code's focus on protection of creditor rights can impede the ability of a troubled systemically important financial institution to effectuate a resolution with the speed necessary to preserve value, protect private interests and minimize systemic risk. While a proposed legislation may modify the code to enhance the process, it does not address some important issues, say attorneys with Skadden Arps Slate Meagher & Flom LLP.
A proposed policy would significantly expand the scope of the ratepayer protection commitments that must be offered by electric utilities seeking Federal Energy Regulatory Commission approval for mergers and, as a result, may materially alter the financial calculus for companies considering those transactions. The proposed policy may also make recovery from bankruptcy even more challenging and uncertain, say attorneys with Morgan L... (continued)
While recent amendments bring most of New York’s Uniform Commercial Code up to date, the state chose not to modernize its entire UCC, as a result of which certain of its provisions do not reflect modern practices, and its version of Article 9 is still out of sync with that of other states, says G. Ray Warner, of counsel at Greenberg Traurig LLP and associate dean for bankruptcy studies at St. John’s University School of Law.
The fallout from the Argentine bond litigation is far from clear. In the meantime, markets, sovereigns and international institutions have addressed the specific contract drafting issues of the pari passu clause such that, going forward, sovereigns may avoid the "ratable payment" interpretation that landed Argentina in its current predicament, say Marco Schnabl and Jordan Wall of Skadden Arps Slate Meagher & Flom LLP.
The rights that the Bankruptcy Code grants to debtor-lessees such as RadioShack Corp. are, in some respects, much greater than the rights RadioShack would have under state law under its leases, posing unique challenges for landlords not necessarily faced by other creditors, say Peter Goodman and Michael Carney of McKool Smith PC.