By Breaking Legal News, Breaking Legal News.

The City Council has appealed a judge's decision to throw out the bankruptcy petition of Pennsylvania's debt-choked capital city, its attorney said.

The appeal was filed Saturday in federal court, City Council attorney Mark Schwartz said in an email.

Last month, a federal bankruptcy judge ruled that Harrisburg may not seek bankruptcy protection, calling such a filing illegal. That ruling cleared the way for the state to take over the city.

The judge said the city had been legally barred by a separate state law, signed June 30 by Gov. Tom Corbett, from seeking bankruptcy protection and, in any case, had no authority to go over the mayor's head to file it.

Originally posted at Breaking Legal News. Please visit http://www.breakinglegalnews.com/.

By Breaking Legal News, Breaking Legal News.

Discount retailer Loehmann's is filing for bankruptcy after its Dubai government-linked owner failed to reach a debt-extension deal with creditors.

Loehmann's says the Chapter 11 filing Monday in the U.S. Bankruptcy Court for the Southern District of New York is "pre-negotiated," meaning it could play out faster than a traditional bankruptcy filing.

Dubai's Istithmar World investment unit bought New York-based Loehmann's for $300 million in 2006. The 89-year-old retailer sells designer brands at discount prices in 15 states and the District of Columbia.

Istithmar is a subsidiary of troubled state conglomerate Dubai World.

Originally posted at Breaking Legal News. Please visit http://www.breakinglegalnews.com/.

By Breaking Legal News, Breaking Legal News.

Metro-Goldwyn-Mayer Studios Inc filed for bankruptcy on Wednesday, under a plan that would put one of Hollywood's most storied film studios under the control of its lenders.

The Chapter 11 filing follows a vote by MGM creditors last week to endorse a "prepackaged" bankruptcy that would put MGM under the control of Hollywood executives Gary Barber and Roger Birnbaum, who control the Spyglass Entertainment film company.

MGM also agreed to concessions to Carl Icahn, one of its largest debtholders, to win the billionaire's support for its restructuring.

Icahn had previously supported a rival bid to merge MGM with another studio, Lions Gate Entertainment Corp.

Founded in 1924 and known for its roaring lion logo, MGM controls the James Bond franchise, and has also produced or released many of Hollywood's best-known films, including "The Wizard of Oz" and "Ben-Hur."

Its reorganization would allow secured lenders including Credit Suisse Group AG and JPMorgan Chase & Co to swap more than $4 billion of MGM debt for most of the equity in a reorganized company.

Originally posted at Breaking Legal News. Please visit http://www.breakinglegalnews.com/.

By Breaking Legal News, Breaking Legal News.

In Six Flags Inc.'s bankruptcy case last fall, a hedge fund that owned senior bonds negotiated the theme-park company's reorganization plan, then dumped lower-ranking bonds it figured would lose value under the deal.

Other creditors cried foul. The hedge fund had used knowledge learned during its negotiations to gain an unfair edge, they suggested, accusing the fund of a "hijacking of the reorganization process."

So it goes in the rough-and-tumble new world of bankruptcy court. The bankruptcy process was created decades ago as a way to give ailing businesses a chance to heal and creditors a shot at repayment. Hedge funds and other big investors have transformed it into something else: a money-making venue where, after buying up distressed companies' debt at a deep discount, they can ply their sophisticated trading techniques in quest of profits. The "bankruptcy exchange," some call it.

This is perfectly legal, but is raising questions of transparency and fairness as the "distressed debt" investors joust with bankruptcy judges and others over what they must disclose as they trade in and out of a company's debt, even while trying to influence its reorganization.

Originally posted at Breaking Legal News. Please visit http://www.breakinglegalnews.com/.

By Breaking Legal News, Breaking Legal News.

Tribune Co. believes it will still emerge from bankruptcy protection this year even though a court-appointed examiner concluded that talks leading up to a leveraged buyout of the company had bordered on fraud.

In a memo to employees, Tribune CEO Randy Michaels and Chief Operating Officer Gerald Spector said they agreed with only some of the conclusions in Monday's report, while disputing others. They did not go into specifics, saying it would be premature to comment while the full examiner's report remains under court seal.

A hearing on whether to release the nearly 700-page document was scheduled for Thursday in Wilmington, Del.

The 2007 leveraged buyout took the company private and ultimately helped land it in Chapter 11. The deal has drawn scrutiny from bondholders who are trying to recover more of their money.

Real estate mogul Sam Zell led the deal, which piled on what turned out to be an unsustainable amount of debt. The company, which owns the Chicago Tribune, Los Angles Times and other properties, filed for Chapter 11 protection in December 2008.

Originally posted at Breaking Legal News. Please visit http://www.breakinglegalnews.com/.

By Breaking Legal News, Breaking Legal News.

A federal appeals court has overturned rulings allowing auto parts supplier Visteon Corp. to terminate its retirees' health and life insurance benefits.

In a ruling Tuesday, the appeals court in Philadelphia sided with attorneys representing some 2,100 retirees from two Visteon manufacturing plants in Indiana.

A Delaware bankruptcy judge concluded in March that the retirees did not have vested rights in the benefits, and that Van Buren Township, Mich.-based Visteon could terminate them unilaterally. That decision was upheld by a federal district court judge in Delaware.

But the appeals court agreed with the retirees that Congress, through the bankruptcy code, intended to restrict a debtor's ability to modify or terminate retiree benefits during a Chapter 11 case, regardless of whether it could terminate those benefits outside of bankruptcy.

Originally posted at Breaking Legal News. Please visit http://www.breakinglegalnews.com/.

By Breaking Legal News, Breaking Legal News.

BP PLC has several options to explore in dealing with the worst environment disaster in U.S. history, but the oil giant may file for bankruptcy if it faces a never-ending flow of claims, lawyers and bankers said Tuesday.

"BP has many options besides bankruptcy and is a long way from exhausting those," said Loretta Cross, a national managing partner at Grant Thornton's corporate-advisory and restructuring-services group, during a conference call organized by the American Bankruptcy Institute.

The Deepwater Horizon platform exploded on April 20, killing 11 people. It sank two days later, triggering a massive oil leak that's still spewing oil and gas. BP shares have plummeted on concern that the company could be overwhelmed by tens of billions of dollars in claims and other liabilities.

Cross, who specializes in energy-company reorganizations, estimated Tuesday that BP needs roughly $30 billion in cash outside of what the company can generate from its balance sheet.

Originally posted at Breaking Legal News. Please visit http://www.breakinglegalnews.com/.

By Breaking Legal News, Breaking Legal News.

A Delaware bankruptcy court judge on Friday cleared the way for auto parts supplier Visteon Corp. to begin soliciting votes on its proposed reorganization plan, which would leave unsecured bond holders in control of the company.

Overruling objections from certain shareholders and holders of unsecured trade claims, Judge Christopher Sontchi approved documents describing Visteon's proposed reorganization plan and the process for creditors to vote on it.

Creditors will have until July 30 to vote on the plan, and Sontchi scheduled a plan confirmation trial to begin Sept. 28.

The shareholders could receive nothing under Visteon's plan, and the trade creditors would get no more than 50 cents on the dollar for their claims, which total about $48 million. Their attorneys argued that the disclosure statement outlining Visteon's plan did not contain enough information on the company's valuation, and that the plan itself was unconfirmable because of how it treats various creditor groups.

Attorneys for Visteon argued that the objections to the disclosure statement were without merit, or that they should be addressed at what promises to be a contentious plan confirmation trial stretching over two weeks.

Originally posted at Breaking Legal News. Please visit http://breakinglegalnews.com/.

By Breaking Legal News, Breaking Legal News.

The FDIC said on Friday the agreement settles claims between the bankrupt bank's holding company and JPMorgan Chase, which acquired the failed bank.

The FDIC is involved because it was appointed receiver of Washington Mutual in September 2008, during the height of the financial crisis. The deal comes after the FDIC board had rejected a previous proposed settlement.

The bank holding company has been seeking a way out of 18 months of legal fights so it can begin repaying creditors.

The three parties have been fighting over deposits Washington Mutual had at its seized bank and over billions of dollars in tax refunds.

"This agreement will result in substantial recoveries to the receiver and resolve potential claims that could have taken years and millions of dollars to litigate," FDIC General Counsel Michael Bradfield said in a statement.

Washington Mutual said in a statement later on Friday that settlement was filed with the full support of the FDIC, JPMorgan, and the official committee of unsecured creditors.

Originally posted at Breaking Legal News. Please visit http://www.breakinglegalnews.com/.

By Breaking Legal News, Breaking Legal News.

Bank holding company Washington Mutual Inc. has filed an amended Chapter 11 reorganization plan.

The plan filed Sunday in Delaware bankruptcy court is based on a settlement involving WMI, the Federal Deposit Insurance Corporation and JPMorgan Chase Bank, which filed lawsuits against one another after the FDIC seized Washington Mutual's flagship bank in 2008 and sold its assets to JPMorgan for $1.9 billion.

The FDIC objected to the initial settlement plan, resulting in negotiations that led to the amended plan.

In addition distributing some $7 billion in funds among various parties as part of the settlement, the plan allows certain creditors to buy new shares in the reorganized company. Holders of existing shares would receive nothing.

Originally posted at Breaking Legal News. Please visit http://www.breakinglegalnews.com/.