Bankruptcy Headlines

Creditors, Caesars Spar over Control of Casino Bankruptcy

Creditors of the bankrupt operating unit of Caesars Entertainment Corp. said that they wanted to stop the casino company from extending the period when it has exclusive control of its chapter 11 reorganization so other plans could be proposed, Reuters reported yesterday. The creditors filed objections on Wednesday to the request by the operating unit to extend to Nov. 15 from May 15 its exclusive right to propose a plan to cut its $18 billion in debt. The operating unit filed for bankruptcy in January, and creditors rarely oppose a company extending exclusive control so early in the case. Among those objecting were the company's lone allies, a group known as the first-lien noteholders who preferred an extension to September.

Justice Department Sues Quicken Loans

The Justice Department filed a lawsuit yesterday against Quicken Loans, the nation’s third-largest mortgage lender, contending that it made hundreds of improper loans through the Federal Housing Administration lending program, costing the agency millions of dollars, the New York Times reported today. The FHA does not make loans itself, but insures them. Participating lenders, including Quicken, which makes more FHA loans than any other institution, have the authority to originate, underwrite and certify mortgages covered by FHA insurance. Under the program, if the borrower later defaults, the holder of the loan can file an insurance claim to cover losses.

Barclays Wins Latest Round in Legal Fight Over Lehman Sale

A federal judge denied Lehman Brothers Inc.’s bid to carve out $1.3 billion from an earlier court decision that awarded $4 billion in disputed assets to Barclays PLC stemming from the U.K. bank’s purchase of Lehman’s brokerage business, the Wall Street Journal reported today. U.S. District Judge Katherine B. Forrest said on Wednesday that Barclays was entitled to all of the so-called margin assets — some billions of dollars in cash and collateral — securing derivatives positions. The ruling is a win for Barclays, which purchased Lehman’s brokerage business days after Lehman’s 2008 collapse. The legal fight over the sale began in 2009, when Lehman sued Barclays saying the British bank negotiated a secret discount when it bought Lehman’s brokerage. A bankruptcy judge concluded that Barclays didn’t receive an improper “windfall” from the sale, but that Lehman’s brokerage was entitled to the approximately $4 billion in margin assets. Both sides appealed, and the district court ruled that Barclays was entitled to both groups of assets. James W. Giddens, the trustee winding down Lehman’s brokerage, appealed to the Second U.S. Circuit Court of Appeals, which last year affirmed the district court ruling.

Atlantic City Power Supplier Agrees to Turn the Lights on at Revel

After a two-week blackout at Atlantic City's Revel Casino, a power supplier has agreed to turn the lights back on at the failed gambling resort under a temporary deal reached in court with its new owner, Reuters reported yesterday. With a hearing scheduled for Monday to reconsider a temporary restraining order to block owner Glenn Straub from using generators, ACR Energy Partners agreed to supply enough electricity to run a fire control system for two weeks. The deal with Straub's company, Polo North, will allow the two sides more time to find the long-term resolution to their dispute. The parties have agreed to a mediation if negotiations break down. ACR, formed to supply the Revel complex with electricity when it opened in 2012, has said that it would shut off power until Straub agreed to abide by a 30-year supply agreement it had with the Revel's former owners, and pay the hefty bills they accrued. Straub, a Florida developer who specializes in buying distressed properties, paid $82 million for the gleaming, $2.4 billion high-rise casino-hotel earlier this year. To sidestep ACR, Straub sought to hook up generators, but on Friday, U.S. District Judge Jerome B. Simandle issued a temporary restraining order barring any such move, citing the potential danger of using outside equipment.

U.S. Trustee Wants Details on RadioShack Customer Data

U.S. Trustee Andrew Vara said in court papers that RadioShack Corp. hasn't specified yet what consumer data could be auctioned off next month as part of the electronics retailer's turnaround, Dow Jones Daily Bankruptcy Review reported today. Lawyers for Vara said in the filing that RadioShack officials haven't revealed what information — potentially home addresses, phone numbers and credit card data — from about 65 million customers could be sold when the Fort Worth, Texas, company auctions off its intellectual property and recognizable trademark on May 11. Vara's lawyers told Judge Brendan Shannon, in the documents filed that the "lack of specificity and clarity surrounding the sale of consumer data" has made it difficult for consumer-privacy ombudsman Elise Frejka to make sure that consumer rights are protected.

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