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U.S. Trustee Raises Concern over Caesars Creditor Deal

A lawyer for the U.S. government's bankruptcy watchdog raised concerns in court over Caesars Entertainment Corp.’s $5 billion creditor deal to push its main unit out of chapter 11, even as hold-out creditors appeared closer to backing the agreement, Reuters reported yesterday. Caesars Entertainment Operating Co. Inc. filed for bankruptcy in January 2015 amid allegations by creditors that its parent had looted the unit of its best assets, leaving it with $18 billion of debt. Las Vegas-based Caesars reached an agreement with creditors last month that includes a $5 billion contribution to CEOC's reorganization plan in exchange for releases from billions of dollars in legal claims. Even though most of the creditors have agreed to drop their allegations against Caesars, the Bankruptcy Code holds that any deal must adhere to the law, Denise Delaurent, an attorney with the U.S. Trustee’s Office, said at an Illinois court hearing. She said her office was reviewing fees and aspects of the deal that released some parties from lawsuits. "From our perspective even if everyone comes to an agreement, it might still violate the law," she said.

Liquidators Seek Chapter 15 for Platinum Partners’ Hedge Funds

Two Platinum Partners hedge funds have sought chapter 15 protection as part of an ongoing liquidation effort, according to court documents filed in New York federal court, Reuters reported yesterday. In August, a Cayman Islands court ordered that an outside expert unwind the so-called offshore versions of its flagship hedge fund, Platinum Partners Value Arbitrage, which, along with the firm, is also being investigated by U.S. authorities. That liquidator, RHSW Caribbean, filed the chapter 15 petition and seeks to protect Platinum’s U.S. assets from creditors while an insolvency proceeding is underway in the Cayman Islands. Mark Nordlicht founded Platinum more than a decade ago and generated years of double-digit percentage returns by investing in often controversial businesses, a Reuters special report revealed. New York-based Platinum has been caught up in federal investigation by the U.S. Securities and Exchange Commission and the U.S. Attorney’s offices in Manhattan and Brooklyn.

Engineering Firm Aricent Offers to Buy Filip Technologies Out of Bankruptcy

Digital design and engineering firm Aricent Holdings Luxembourg is angling to buy child-locator-technology company FilipTechnologies Inc. out of bankruptcy, the Wall Street Journal reported today. If successful as the stalking-horse bidder in Filip’s bankruptcy auction, Aricent will acquire Filip’s intellectual property, databases and proprietary software for $475,000 in cash plus liabilities, according to bankruptcy court papers filed yesterday. Filip creates colorful child-appropriate wristband phones and tracking devices that keep parents informed of their children’s whereabouts. The system incorporates an emergency alert that notifies parents if their child has left a designated safe zone. The company is named for founder Sten Kirkbak’s son, who wandered off in a crowded shopping mall when he was 3 years old, according to the company’s website.

Hensarling: CFPB May Not Be Independent After Court Ruling

A court decision to make the Consumer Financial Protection Bureau’s director report to the president means that the statutorily independent agency must follow executive orders, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) argued, reported yesterday. The U.S. Court of Appeals for the D.C. Circuit’s recent decision means that the CFPB “is not, and may no longer be considered to be, an independent regulatory agency,” Hensarling wrote in a letter to CFPB Director Richard Cordray. “Consequently, it is also clear that executive orders applicable to executive agencies apply in full to the CFPB,” Hensarling said. On Oct. 11, the appeals court struck down elements of the CFPB’s current governance structure as unconstitutional. Under the 2010 Dodd-Frank Act, the CFPB was created as an independent agency, and the president originally could only dismiss the agency’s director for cause. The court ruling lifted that limitation, saying that it gave the director too much power. Hensarling pointed to four executive orders that President Obama and former President Clinton signed that should now impact the CFPB’s rulemaking process in light of the decision. These orders require executive agencies to conduct cost-benefit analyses of new regulations and report on their consultations with state, local, and tribal governments.

HUD Watchdog: Servicer Foreclosure Delays Cost FHA $2.23 Billion

A new report from a government watchdog shows that mortgage servicers’ delays in foreclosing on properties and subsequent delays in the conveyance of those properties to the Federal Housing Administration may have cost the FHA as much as $2.23 billion in unnecessary payouts, reported yesterday. The report, issued late last week by the Department of Housing and Urban Development Office of Inspector General, found that HUD paid claims for an estimated 239,000 properties that servicers did not foreclose upon or convey on time, and those delays cost the FHA an estimated $2.23 billion. According to the HUD-OIG report, the watchdog reviewed a “statistical sample” of 90 claims by HUD out of nearly 250,000 loans that had indicators that they may have missed their deadlines during the past five years. Of those 90 loans, 89 missed a foreclosure deadline, a conveyance deadline, or both, the report showed. According to the HUD-OIG report, HUD paid an estimated $141.9 million for servicers’ claims for “unreasonable and unnecessary debenture interest” that servicers incurred after missing a foreclosure or conveyance deadline.

Denver Energy Firm Files for Chapter 7 Liquidation

PetroHunter Energy Corp., founded in 2005, has filed for chapter 7 bankruptcy and liquidation with the U.S. Bankruptcy Court in Denver, the Denver Business Journal reported today. The company said that it had between 50 and 99 creditors, and assets of between $1 million and $10 million, and liabilities estimated between $100 million and $500 million, according to its court filing. According to PetroHunter's last quarterly filing, for the three months ending June 2013, the company then had total assets of $96,501, total liabilities of nearly $81.5 million and a net loss of $2.2 million for the quarter. At the time, the company owned 11 wellbores in the Piceance Basin in western Colorado, plus two exploration permits in Australia. Read more

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