Harbinger cannot 'leapfrog' LightSquared creditors -U.S. judge

By Nick Brown

NEW YORK Thu Oct 30, 2014 7:38pm EDT

NEW YORK Oct 30 (Reuters) - Hedge fund manager Phil Falcone's efforts to hold onto a piece of his LightSquared wireless venture took a hit on Thursday when a bankruptcy judge denied a request by his Harbinger Capital Partners to wipe out a lender group's $1.7 billion claim against a unit of the company.

Judge Shelley Chapman of U.S. Bankruptcy Court in Manhattan criticized the request as an attempt by Harbinger, which controls LightSquared, "to leapfrog up the capital structure over secured creditors."

LightSquared has been in Chapter 11 bankruptcy since 2012, when regulators barred it from using its wireless spectrum due to fears of interference with GPS systems. It has proposed a restructuring plan that would transfer control of the company to the lenders.

Harbinger, hoping to salvage some equity, submitted a competing plan in August, which would split LightSquared's so-called "Inc" and "LP" units and allow Harbinger to retain a stake in the Inc assets.

But Harbinger's plan was contingent on Chapman ruling that the lenders did not have any claim against the Inc assets.

Chapman's ruling would appear to sink Harbinger's plan, but its lawyer said it is not giving up. "We're considering amending the plan to comply with the court's decision," attorney David Friedman told Reuters.

The ruling is the latest wrinkle in what has become one of the messiest and most contentious bankruptcies in recent memory.

The case included a weeks-long trial earlier this year between LightSquared and Dish Network Corp Chairman Charles Ergen, LightSquared's single largest creditor. LightSquared accused Ergen of using underhanded tactics to infiltrate its capital structure and gain control of the company on Dish's behalf.

The sides ultimately reached a consensual restructuring under which Ergen would become LightSquared's primary lender after bankruptcy, but that deal fell apart over the summer amid objections by Harbinger.

With stakeholders divided on how to restructure, the company's future is uncertain, and a frustrated Judge Chapman has threatened to liquidate the company if sides don't make progress on a consensual deal. Months of mediation sessions with a separate bankruptcy judge have yet to yield a solution that has stuck.

Under LightSquared's proposed restructuring, which is still on the table but opposed by Harbinger, Ergen's $1 billion in loan debt would be repaid in the form of new debt and nonvoting shares. (Reporting by Nick Brown; Editing by Cynthia Osterman)

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UPDATE 3-Stockton, California, workers relieved as judge ruling secures pensions

Thu Oct 30, 2014 8:00pm EDT

(Adds comments from judge, background, costs)

By Robin Respaut

SACRAMENTO Oct 30 (Reuters) - Stockton, California, employees breathed a sigh of relief on Thursday as a judge ruled the city could exit bankruptcy, leaving benefits administered by public pension giant Calpers untouched.

The ruling, however, left investors and analysts confused about how pension funds stacked up in terms of their priority of treatment in a bankruptcy proceeding.

Public employees had worried about their pensions after U.S. Bankruptcy Judge Christopher Klein ruled earlier in October that the city's contract with the California Public Employees' Retirement System (Calpers), the largest public pension fund in the United States, could be rejected.

"I don't know if I'm going to dance or cry," said retired Stockton police officer Anthony Delgado.

The plan proposed by the city negotiated the reduction of more than $2 billion of debts. Holdout creditor Franklin Templeton was one of those taking a haircut from its collateral of golf courses and a park, as the judge ruled it would get just over $4 million from an original debt of $36 million.

"Bankruptcy is all about the impairment of contracts, that's what we do," Klein said. He added, however, that bankruptcy is an expensive option for cities. The city had spent almost $14 million on legal and other costs, according to its latest expense report in May.

"This is a very expensive case, and probably should be an object lesson why the Chapter 9 process is not lightly to be entered into," Klein said.

Stockton City Manager Kurt Wilson said: "It's a good day. Today really reinforces to the citizens of Stockton that we're going to be in a stable place."

The Stockton case was riddled with questions about whether public employee pensions should be cut along with debts held by bondholders. The city vehemently opposed the idea of cutting pensions, fearing it would be hit by a $1.6 billion termination fee from Calpers and that employees would lose their jobs.

Analysts said those questions about the status of different stakeholders remain to be conclusively answered.

Retirees made some concessions under the bankruptcy plan, such as losing their healthcare benefit, which amounted to $550 million. Bondholders were also forced to make concessions, reducing the amount of debt they would be repaid by the city.

"We need a black and white ruling on this matter," said David Tawil, a former bankruptcy attorney and president of New-York based hedge fund Maglan Capital, which invests in distressed situations.

"At some point we will get to a municipal situation where a city will not be able to function without a compromise of its pension obligations," Tawil said. "This question has been punted on once again."

Calpers welcomed the judge's decision and the city's plan to exit bankruptcy, which it said "protects the pension promises made to its public employees".

A haircut to Calpers pensions would have been unprecedented in municipal bankruptcy, although pensions elsewhere are under pressure in such situations. The judge presiding over Detroit's exit from bankruptcy ruled that pensions could be impaired although cuts were eased by court-ordered mediation.

Klein said he made his decision after examining the alternative of going "back to square one and running up many more millions of dollars for the city."

"I've looked long and hard at the history of this case and the decisions that have been made and considered the alternative," Klein said in court. "This plan, I'm persuaded is the best that can be done in terms of restructuring the debts of the city of Stockton."

Credit ratings agency Standard & Poor's said Stockton's experience showed bankruptcy was unlikely to be an attractive route for other municipalities due to the high legal costs and the "negative campaign" that a city has to make to argue that it is unable to sustainably operate without defaulting. (Additional reporting by Tim Reid in Los Angeles, writing by Megan Davies; Editing by Bernard Orr)

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Bail-in of senior European bank debt not fully priced in

By Alice Gledhill

Fri Oct 31, 2014 4:27am EDT

LONDON, Oct 31 (IFR) - The European senior bank debt market is yet to fully factor in the risk of bail-in despite an approaching deadline that will see some countries introduce burden sharing measures into local laws as early as 2015.

The Bank Recovery and Resolution Directive (BRRD) adopted by the European Parliament in April requires that at least 8% of a bank's total liabilities must be bailed in before public funds can be tapped. That will ensure that unsecured bondholders, rather than taxpayers, foot the bill for failing banks.

Yet, European banks have seen their spreads plummet throughout the year, in some cases tightening by more than 100bp since January as seen in the case of Bankia's 3.5% 2019 euro senior bond.

"The market is not yet differentiating between the varying capital ratios across different institutions," said Laurent Frings, co-head of EMEA Credit Research at Aberdeen Asset Management.

"The French and Austrian banks have very little Tier 2 capital which is protecting the senior investors. This hasn't been priced in."

His view was echoed by Simon McGeary, head of the new products group at Citigroup. "I think it is priced in to some degree, but not completely yet. There was a bit of a move as far back as 2010, when people started to change their assumptions about governments stepping in to support banks in distress."

So far the market has been proven right. There has been a reluctance to bail-in senior debtholders as the cases of SNS and more recently Banco Espirito Santo showed, when subordinated debt was wiped out but senior left untouched.

But while some governments could struggle to introduce the BRRD before the January 2016 deadline, others, including the UK, Austria and Germany, have fast-tracked it and will implement the measures alongside other BRRD provisions from January next year.

Frings said the unpredictability of future legislative changes added a further dimension of risk.

"The market should be more circumspect as legislation can be brought in very quickly. There is almost too much confidence that senior debt is safe until January 2016."

That sense of security has not been helped by distortions in the market. The introduction of the TLTRO has seen issuance from European banks fall sharply.

Since the beginning of September 2014, 14.5bn-equivalent of senior debt has been issued by European banks, significantly less than the 27bn-equivalent issued over the same period in 2013.

Meanwhile, even though a recent Moody's report suggested that changes in spreads on bonds eligible for bail-in were evidence that markets are already pricing in the potential bail-in of European banks, not everyone agrees.

Bankers and investors felt the bail-in mechanism was just one of many factors driving spreads, not least the ECB's third covered bond purchase programme.

"The markets are starting to give thought to it, but covered bonds diverging could be down to a number of things such as anticipated ECB buying. The market is so compressed, it's hard to discern," said Citi's McGeary.

A seven-year covered bond issue priced this week for Credito Emiliano showed how far spreads have tightened. The deal came at 25bp over mid-swaps, making it the tightest pricing for a peripheral covered bond since the crisis.

LINE OF DEFENCE

How pricing of senior bank debt evolves will likely be down to the market's growing awareness of where that debt sits in the liability structure, and therefore how much of a line of defence lies before it.

The Moody's report emphasised that the extent of losses would depend both on the thickness of the debt tranche which bondholders inhabit, and the amount of more junior debt that would be bailed-in first.

"For a given loss in terms of banks assets, the more you have subordinated to you, the better off you are. By the same notion, the more people you have alongside you, the better off you are," said Colin Ellis, chief credit officer for EMEA at Moody's.

While the European bail-in regime is playing on investors' minds, something bigger could be coming down in the form of the Total Loss Absorbing Capacity (TLAC). That would require banks to hold an additional safety buffer equivalent to 16% to 20% of their risk-weighted assets

While it is very much up in the air as to what is included, senior debt is far from being off the hook; being "bailinable", it could be used to fill some of the TLAC requirements. (Reporting By Alice Gledhill, Editing by Helene Durand, Julian Baker)

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Dow Jones asks court to deny GT Advanced, Apple's secrecy motion

Wed Oct 29, 2014 7:38am EDT

Oct 29 (Reuters) - Dow Jones & Co Inc, publisher of the Wall Street Journal, has asked a court to deny a request by Apple Inc and GT Advanced Technology Inc to keep under seal some documents relating to GT Advanced's bankruptcy.

Dow Jones, owned by News Corp, said keeping the documents under seal is an offense to constitutional principles of public access, according to the publisher's court filing late on Tuesday.

GT Advanced, which supplied sapphire material to Apple to make smartphone screens, filed for Chapter 11 protection earlier this month under mysterious circumstances.

GT refused to explain why it had imploded, citing confidentiality clauses in its Apple contracts.

The case is In re: GT Advanced Technologies Inc, U.S. Bankruptcy Court, District of New Hampshire, No: 14-11916. (Reporting by Tanya Agrawal in Bangalore; Editing by Savio D'Souza)

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UPDATE 1-Dow Jones asks court to deny GT Advanced, Apple's secrecy motion

Wed Oct 29, 2014 8:15am EDT

(Adds details from filing, background)

Oct 29 (Reuters) - Dow Jones & Co Inc, publisher of the Wall Street Journal, has asked a court to deny a request by Apple Inc and GT Advanced Technology Inc to keep under seal some documents relating to GT Advanced's bankruptcy.

Dow Jones, owned by News Corp, said keeping the documents under seal is an offense to constitutional principles of public access, according to the publisher's court filing on Tuesday.

GT Advanced, which supplied sapphire material to Apple to make smartphone screens, filed for Chapter 11 protection earlier this month and refused to explain why it had imploded, citing confidentiality clauses in its Apple contracts.

Few details have emerged since the bankruptcy filing, which wiped out most of GT's market value and triggered speculation over what may have soured its relationship with Apple.

Dow Jones said in Tuesday's filing that the companies' had not cited any authority to support their "brazen" request and asked the court to reject their "ransom" demands.

Under U.S. bankruptcy laws, there are narrow exceptions which allow documents to be sealed and Dow Jones said neither company had argued that certain documents in the case qualified for this extraordinary protection.

"To the contrary, GTAT has stated unequivocally that the sealed materials do not satisfy the statutory test," Dow Jones said in the filing.

GT Advanced and Apple were not immediately available for comment.

GT Advanced, which proceeded with its bankruptcy after striking an agreement with Apple, said earlier this week that the iPhone maker had threatened to seek damages of more than $1 billion against the company.

The case is In re: GT Advanced Technologies Inc, U.S. Bankruptcy Court, District of New Hampshire, No: 14-11916. (Reporting by Tanya Agrawal in Bangalore; Editing by Savio D'Souza)

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BRIEF-Vaahto Group Vapate Oy unit files for bankruptcy

Wed Oct 29, 2014 10:05am EDT

* Says Vapate Oy has sold all its unprofitable business related to pulp, paper and board industry solutions during years 2013 and 2014

* Board of directors of vapate oy has stated that liabilities of company are greater than its assets and company is no longer able to meet its obligations

* Loans of Vapate Oy mature in bankruptcy. Parent company has secured loans for financiers of company

* Negotiations with financiers have already begun on how to arrange securities of parent in such a way that group's continuing operations does not become endangered due to securities Source text for Eikon: Further company coverage: (gdynia.newsroom@thomsonreuters.com; +48 58 698 3920)

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BRIEF-The Fantastic Company unit Sicara files for insolvency

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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U.S. appeals court rules for GM in Spyker's Saab sale lawsuit

By Jonathan Stempel

Fri Oct 24, 2014 1:52pm EDT

Oct 24 (Reuters) - General Motors Co persuaded a federal appeals court to uphold the dismissal of a $3 billion lawsuit in which Spyker NV accused it of derailing a plan to sell the Swedish automaker Saab to a Chinese company.

The 6th U.S. Circuit Court of Appeals in Cincinnati on Friday said Spyker failed to show GM intentionally interfered with the Dutch company's effort to sell Saab to Zhejiang Youngman Lotus Automobile Co, leading to Saab's bankruptcy.

GM had sold a majority of Saab to Spyker in 2010. As part of that sale, it licensed Saab to build vehicles using the Detroit-based automaker's intellectual property, and retained a right to end the license if Saab were sold without its consent.

Spyker said it was in sale talks with Youngman in December 2011 when a GM spokesman made statements suggesting that consent would not be provided, and that a sale might hurt GM. Youngman said it decided to back out "due to GM's position."

Writing for a three-judge 6th Circuit panel, Circuit Judge Eugene Siler said GM's statements were not malicious, and that it had "legitimate business concerns" about the sale, including over who would benefit from Saab's use of its technology.

Siler also called Spyker's claim "fatally flawed" because it assumed that GM misinterpreted the license agreement, meaning the spokesman's statements "would have at most amounted to a mistake."

A lawyer for Spyker had no immediate comment. GM spokesman Dave Roman did not immediately respond to requests for comment.

Friday's decision upheld a June 2013 ruling by U.S. District Judge Gershwin Drain in Flint, Michigan.

Saab's assets were bought out of bankruptcy in 2012 by China's National Electric Vehicle Sweden.

NEVS stopped building cars in May because of a lack of money, and in August won creditor protection in Sweden so it could seek new funds.

The case is Saab Automobile AB et al v. General Motors Co, 6th U.S. Circuit Court of Appeals, No. 13-1899. (Reporting by Jonathan Stempel in New York; editing by Matthew Lewis)

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UPDATE 1-U.S. appeals court rules for GM over Spyker's Saab sale

Fri Oct 24, 2014 4:12pm EDT

(Adds GM statement, closing share price)

By Jonathan Stempel

Oct 24 (Reuters) - General Motors Co persuaded a federal appeals court to uphold the dismissal of a $3 billion lawsuit in which Spyker NV accused it of derailing a plan to sell the Swedish automaker Saab to a Chinese company.

The 6th U.S. Circuit Court of Appeals in Cincinnati on Friday said Spyker failed to show GM intentionally interfered with the Dutch company's effort to sell Saab to Zhejiang Youngman Lotus Automobile Co, leading to Saab's bankruptcy.

GM had sold a majority of Saab to Spyker in 2010. As part of that sale, it licensed Saab to build vehicles using the Detroit-based automaker's intellectual property, and retained a right to end the license if Saab were sold without its consent.

Spyker said it was in sale talks with Youngman in December 2011 when a GM spokesman made statements suggesting that consent would not be provided, and that a sale might hurt GM. Youngman said it decided to back out "due to GM's position."

Writing for a three-judge 6th Circuit panel, Circuit Judge Eugene Siler said GM's statements were not malicious, and that it had "legitimate business concerns" about the sale, including who would benefit from Saab's use of its technology.

Siler also called Spyker's claim "fatally flawed" because it assumed that GM misinterpreted the license agreement, meaning the spokesman's statements "would have at most amounted to a mistake."

Friday's decision upheld a June 2013 ruling by U.S. District Judge Gershwin Drain in Flint, Michigan.

A lawyer for Spyker declined to comment immediately.

GM spokesman Alan Adler said in an emailed statement: "GM is very pleased that both the district court and now the Court of Appeals have determined that GM acted properly."

Saab's assets were bought out of bankruptcy in 2012 by China's National Electric Vehicle Sweden.

NEVS stopped building cars in May because of a lack of money, and in August won creditor protection in Sweden so it could seek new funds.

GM shares closed down 89 cents, or 2.9 percent, at $30.04 on Friday.

The case is Saab Automobile AB et al v. General Motors Co, 6th U.S. Circuit Court of Appeals, No. 13-1899. (Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis and Richard Chang)

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BRIEF-The Fantastic Company unit Sicara files for insolvency

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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U.S. appeals court rules for GM in Spyker's Saab sale lawsuit

By Jonathan Stempel

Fri Oct 24, 2014 1:52pm EDT

Oct 24 (Reuters) - General Motors Co persuaded a federal appeals court to uphold the dismissal of a $3 billion lawsuit in which Spyker NV accused it of derailing a plan to sell the Swedish automaker Saab to a Chinese company.

The 6th U.S. Circuit Court of Appeals in Cincinnati on Friday said Spyker failed to show GM intentionally interfered with the Dutch company's effort to sell Saab to Zhejiang Youngman Lotus Automobile Co, leading to Saab's bankruptcy.

GM had sold a majority of Saab to Spyker in 2010. As part of that sale, it licensed Saab to build vehicles using the Detroit-based automaker's intellectual property, and retained a right to end the license if Saab were sold without its consent.

Spyker said it was in sale talks with Youngman in December 2011 when a GM spokesman made statements suggesting that consent would not be provided, and that a sale might hurt GM. Youngman said it decided to back out "due to GM's position."

Writing for a three-judge 6th Circuit panel, Circuit Judge Eugene Siler said GM's statements were not malicious, and that it had "legitimate business concerns" about the sale, including over who would benefit from Saab's use of its technology.

Siler also called Spyker's claim "fatally flawed" because it assumed that GM misinterpreted the license agreement, meaning the spokesman's statements "would have at most amounted to a mistake."

A lawyer for Spyker had no immediate comment. GM spokesman Dave Roman did not immediately respond to requests for comment.

Friday's decision upheld a June 2013 ruling by U.S. District Judge Gershwin Drain in Flint, Michigan.

Saab's assets were bought out of bankruptcy in 2012 by China's National Electric Vehicle Sweden.

NEVS stopped building cars in May because of a lack of money, and in August won creditor protection in Sweden so it could seek new funds.

The case is Saab Automobile AB et al v. General Motors Co, 6th U.S. Circuit Court of Appeals, No. 13-1899. (Reporting by Jonathan Stempel in New York; editing by Matthew Lewis)

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UPDATE 1-U.S. appeals court rules for GM over Spyker's Saab sale

Fri Oct 24, 2014 4:12pm EDT

(Adds GM statement, closing share price)

By Jonathan Stempel

Oct 24 (Reuters) - General Motors Co persuaded a federal appeals court to uphold the dismissal of a $3 billion lawsuit in which Spyker NV accused it of derailing a plan to sell the Swedish automaker Saab to a Chinese company.

The 6th U.S. Circuit Court of Appeals in Cincinnati on Friday said Spyker failed to show GM intentionally interfered with the Dutch company's effort to sell Saab to Zhejiang Youngman Lotus Automobile Co, leading to Saab's bankruptcy.

GM had sold a majority of Saab to Spyker in 2010. As part of that sale, it licensed Saab to build vehicles using the Detroit-based automaker's intellectual property, and retained a right to end the license if Saab were sold without its consent.

Spyker said it was in sale talks with Youngman in December 2011 when a GM spokesman made statements suggesting that consent would not be provided, and that a sale might hurt GM. Youngman said it decided to back out "due to GM's position."

Writing for a three-judge 6th Circuit panel, Circuit Judge Eugene Siler said GM's statements were not malicious, and that it had "legitimate business concerns" about the sale, including who would benefit from Saab's use of its technology.

Siler also called Spyker's claim "fatally flawed" because it assumed that GM misinterpreted the license agreement, meaning the spokesman's statements "would have at most amounted to a mistake."

Friday's decision upheld a June 2013 ruling by U.S. District Judge Gershwin Drain in Flint, Michigan.

A lawyer for Spyker declined to comment immediately.

GM spokesman Alan Adler said in an emailed statement: "GM is very pleased that both the district court and now the Court of Appeals have determined that GM acted properly."

Saab's assets were bought out of bankruptcy in 2012 by China's National Electric Vehicle Sweden.

NEVS stopped building cars in May because of a lack of money, and in August won creditor protection in Sweden so it could seek new funds.

GM shares closed down 89 cents, or 2.9 percent, at $30.04 on Friday.

The case is Saab Automobile AB et al v. General Motors Co, 6th U.S. Circuit Court of Appeals, No. 13-1899. (Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis and Richard Chang)

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BRIEF-The Fantastic Company unit Sicara files for insolvency

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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U.S. appeals court rules for GM in Spyker's Saab sale lawsuit

By Jonathan Stempel

Fri Oct 24, 2014 1:52pm EDT

Oct 24 (Reuters) - General Motors Co persuaded a federal appeals court to uphold the dismissal of a $3 billion lawsuit in which Spyker NV accused it of derailing a plan to sell the Swedish automaker Saab to a Chinese company.

The 6th U.S. Circuit Court of Appeals in Cincinnati on Friday said Spyker failed to show GM intentionally interfered with the Dutch company's effort to sell Saab to Zhejiang Youngman Lotus Automobile Co, leading to Saab's bankruptcy.

GM had sold a majority of Saab to Spyker in 2010. As part of that sale, it licensed Saab to build vehicles using the Detroit-based automaker's intellectual property, and retained a right to end the license if Saab were sold without its consent.

Spyker said it was in sale talks with Youngman in December 2011 when a GM spokesman made statements suggesting that consent would not be provided, and that a sale might hurt GM. Youngman said it decided to back out "due to GM's position."

Writing for a three-judge 6th Circuit panel, Circuit Judge Eugene Siler said GM's statements were not malicious, and that it had "legitimate business concerns" about the sale, including over who would benefit from Saab's use of its technology.

Siler also called Spyker's claim "fatally flawed" because it assumed that GM misinterpreted the license agreement, meaning the spokesman's statements "would have at most amounted to a mistake."

A lawyer for Spyker had no immediate comment. GM spokesman Dave Roman did not immediately respond to requests for comment.

Friday's decision upheld a June 2013 ruling by U.S. District Judge Gershwin Drain in Flint, Michigan.

Saab's assets were bought out of bankruptcy in 2012 by China's National Electric Vehicle Sweden.

NEVS stopped building cars in May because of a lack of money, and in August won creditor protection in Sweden so it could seek new funds.

The case is Saab Automobile AB et al v. General Motors Co, 6th U.S. Circuit Court of Appeals, No. 13-1899. (Reporting by Jonathan Stempel in New York; editing by Matthew Lewis)

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UPDATE 1-U.S. appeals court rules for GM over Spyker's Saab sale

Fri Oct 24, 2014 4:12pm EDT

(Adds GM statement, closing share price)

By Jonathan Stempel

Oct 24 (Reuters) - General Motors Co persuaded a federal appeals court to uphold the dismissal of a $3 billion lawsuit in which Spyker NV accused it of derailing a plan to sell the Swedish automaker Saab to a Chinese company.

The 6th U.S. Circuit Court of Appeals in Cincinnati on Friday said Spyker failed to show GM intentionally interfered with the Dutch company's effort to sell Saab to Zhejiang Youngman Lotus Automobile Co, leading to Saab's bankruptcy.

GM had sold a majority of Saab to Spyker in 2010. As part of that sale, it licensed Saab to build vehicles using the Detroit-based automaker's intellectual property, and retained a right to end the license if Saab were sold without its consent.

Spyker said it was in sale talks with Youngman in December 2011 when a GM spokesman made statements suggesting that consent would not be provided, and that a sale might hurt GM. Youngman said it decided to back out "due to GM's position."

Writing for a three-judge 6th Circuit panel, Circuit Judge Eugene Siler said GM's statements were not malicious, and that it had "legitimate business concerns" about the sale, including who would benefit from Saab's use of its technology.

Siler also called Spyker's claim "fatally flawed" because it assumed that GM misinterpreted the license agreement, meaning the spokesman's statements "would have at most amounted to a mistake."

Friday's decision upheld a June 2013 ruling by U.S. District Judge Gershwin Drain in Flint, Michigan.

A lawyer for Spyker declined to comment immediately.

GM spokesman Alan Adler said in an emailed statement: "GM is very pleased that both the district court and now the Court of Appeals have determined that GM acted properly."

Saab's assets were bought out of bankruptcy in 2012 by China's National Electric Vehicle Sweden.

NEVS stopped building cars in May because of a lack of money, and in August won creditor protection in Sweden so it could seek new funds.

GM shares closed down 89 cents, or 2.9 percent, at $30.04 on Friday.

The case is Saab Automobile AB et al v. General Motors Co, 6th U.S. Circuit Court of Appeals, No. 13-1899. (Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis and Richard Chang)

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UPDATE 2-Apple ponders sapphire options, leaves door open for GT

Thu Oct 23, 2014 2:02pm EDT

(Recasts with Apple's statement)

Oct 23 (Reuters) - Apple Inc said on Thursday it is studying options for sapphire supply and might work again with GT Advanced Technologies Inc if the distressed supplier can reduce production costs for the scratch-resistant material.

GT, a former stock market darling and supplier to Apple, filed for bankruptcy on Oct 6 in a stunning turn of events for a company whose fortunes looked bright only a few months ago. Apple said on Thursday that GT's "ambitious" vision of sapphire manufacturing was ultimately not quite ready for primetime.

Few details have emerged since the bankruptcy filing, which wiped out most of GT's market value and triggered speculation over what may have soured its relationship with Apple.

But on Thursday, Apple, which had backed the development with GT of a sapphire-manufacturing plant in Arizona, said it will keep an eye on GT's advances, holding open the possibility of doing business with it in future.

"Apple put a lot of effort into an ambitious new sapphire manufacturing process with GTAT which is not ready for production. We're going to continue evaluating GTAT's progress on larger sapphire boule development, as well as consider other options for the facility," spokeswoman Kristin Huguet said, referring to raw cylinders of the material.

At the heart of GT's bankruptcy filing was a deal struck with Apple in November 2013. GT Advanced was to have used the Arizona plant to make scratch-resistant sapphire exclusively for Apple. That sapphire was to have eventually found its way into future mobile devices, such as iPhones - where it's already in use in their fingerprint sensors - or the upcoming Apple Watch.

On Thursday, GT said it will continue "technical exchanges" with Apple on making larger, next-generation sapphire boules, raw cylinders of the material that effectively increase capacity and lower the unit cost of production. GT said it would expand into boules of more than 165 kg, from the current 115 kg.

On Thursday, GT Advanced also laid out the details of an agreement struck and described in court on Tuesday.

Under that pact, GT will stop making sapphire materials for now and focus on supplying equipment to make sapphire crystals.

GT said it would be released from all exclusivity obligations with Apple and a mechanism would be provided for the iPhone maker to recover its $439 million pre-payment to the company, without interest.

At a hearing this week at the U.S. Bankruptcy Court in Springfield, Massachusetts, GT said the expected deal with Apple would save money and allow it to be more open about its mysterious Chapter 11 filing.

GT said on Thursday it would wind down its sapphire production factories in Mesa, Arizona and Salem, Massachusetts. It has laid off about 650 employees at the Mesa plant and expects additional job cuts in Salem.

GT will retain control of its intellectual property and will be able to sell its sapphire fabrication technology without restrictions, it said in a statement. (Reporting by Sayantani Ghosh in Bangalore; Editing by Saumyadeb Chakrabarty and Cynthia Osterman)

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GT Advanced shareholders see value in stock despite bankruptcy

By Nick Brown

Thu Oct 23, 2014 4:27pm EDT

Oct 23 (Reuters) - Shareholders of GT Advanced Technologies are lobbying regulators to form a committee to vouch for their interests in the sapphire maker's bankruptcy, believing their shares may still have value.

GT Advanced, which supplied sapphire to Apple Inc, filed for Chapter 11 protection this month under mysterious circumstances, sending shares plummeting.

The case boggled the minds of market analysts when GT refused to explain why it had imploded, citing confidentiality clauses in its Apple contracts.

While shareholders are typically wiped out in bankruptcy, GT Advanced stockholders believe their equity may not be worthless. Some are reaching out to the U.S. Department of Justice's bankruptcy regulator, the U.S. Trustee Program, asking it to form a committee in GT's bankruptcy to represent shareholder interests.

According to a source close to the effort, law firm Brown Rudnick, which routinely represents creditors in big Chapter 11 cases, is drafting a letter to the Trustee on behalf of a shareholder group requesting a committee.

Other shareholders, like Nathan Cottrell, are working independently. Cottrell, a Philadelphia-based IT salesman, told Reuters he's reached out to the Trustee's office to request a committee and been in touch with law firms about representation.

GT has "a lot of other product lines that are about to start firing up," Cottrell said in an interview on Thursday. "I believe there's value for equity."

The odds may not be in shareholders' favor. Official creditors' committees, appointed by the Trustee and paid for by the debtor, are only formed when the Trustee feels the creditor group in question has a decent shot at recovery.

Since stockholders of bankrupt companies are usually out of the money, equity committees are rare, and shareholders tend not to have a unified voice in Chapter 11 cases.

The company's stock no longer trades on the Nasdaq, but still trades over the counter at a price that currently values GT at $72 million, according to Thomson Reuters data.

Early in GT's case, company attorney Luc Despins said GT "feels terrible" about the loss to shareholders and "will work every day to recover that value."

The Trustee has yet to make a decision on an equity committee, and a spokeswoman for the office declined to comment on Thursday. Despins, meanwhile, did not return a call seeking comment.

One reason for lingering uncertainty over equity value may be the refusal by GT to disclose the specifics of its downfall, which has drawn the ire of creditors and regulators, the Trustee included.

GT has said it plans to shut down key sapphire operations in Mesa, Arizona, laying off hundreds and reorganizing around a smaller business.

Creditors are hoping for some clarity on the company's financial picture in the coming days, when GT has said it will file a proposed settlement agreement with Apple that may detail its collapse.

Shareholders this month sued the company's officers and directors, accusing them of providing misleading information about stock and bond offerings. (Reporting by Nick Brown; editing by Andrew Hay)

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BRIEF-The Fantastic Company unit Sicara files for insolvency

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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U.S. SEC slams tycoon Wyly's bankruptcy budget as 'staggering'

By Joseph Ax and Nate Raymond

Wed Oct 22, 2014 6:43pm EDT

Oct 22 (Reuters) - Texas tycoon Sam Wyly, who filed for bankruptcy this week, is trying to exhaust his fortune through exorbitant spending to impede the U.S. Securities and Exchange Commission's collection of a $198.1 million fraud claim against him, the regulator told a U.S. judge on Wednesday.

During a hearing in Dallas bankruptcy court, a lawyer for the SEC criticized Wyly's proposed budget as "staggering." Items include $32,000 a month for assistants to help him write his books and nearly $7,000 a month to support elderly friends and family members.

"We are concerned that the debtor is attempting to deplete domestic assets and making it harder for U.S. creditors to collect," Angela Dunn, an SEC lawyer, said.

A lawyer for Wyly, Josiah Daniel, said the budget "reflects some substantial cuts." But U.S. Bankruptcy Judge Barbara Houser said Wyly should consider whether such expenses are "appropriate" given his bankruptcy filing.

"Not all debtors are created equal, and certainly Mr. Wyly is an unusual debtor in the sense of the magnitude of his assets and conversely the magnitude of his liability," she said.

Wyly, 80, filed for Chapter 11 protection on Sunday, saying he cannot afford the SEC's claim as well as a potential tax judgment from the Internal Revenue Service.

The filing came after U.S. District Judge Shira Scheindlin in New York last month ordered Wyly and the estate of his late brother Charles to pay $187.7 million plus interest for their role in a fraudulent scheme.

The SEC's calculations put the total figure for both brothers at just under $300 million, one of the largest judgments ever against individual defendants, with Sam Wyly responsible for $198.1 million.

The SEC has accused the brothers of constructing a complex system of trusts in the Isle of Man that netted them about $550 million in undisclosed profits through more than a decade of hidden trades in four companies they controlled.

Those companies included Sterling Software Inc, Michaels Stores Inc, Sterling Commerce Inc and Scottish Annuity & Life Holdings Ltd, now Scottish Re Group Ltd.

Scheindlin's order followed a jury verdict in May that found the brothers liable for fraud. Charles Wyly died in a 2011 car crash, and his estate had been substituted as a defendant.

The bankruptcy filing sets up a potential jurisdictional fight, with Scheindlin scheduled on Thursday to consider the SEC's request to freeze all of the Wylys' assets, including the offshore trust funds.

Daniel, Wyly's lawyer, contended on Wednesday that the SEC's freeze request would violate the bankruptcy court's authority.

The two sides are wrangling over whether the hundreds of millions of dollars that remain in the offshore trusts should be subject to collection.

The Wylys have argued the assets belong to their children and other beneficiaries, while the SEC asserts the jury found the brothers controlled the money.

If the offshore assets are included, the SEC claims, the Wylys can satisfy the judgment without going bankrupt.

The bankruptcy case is In re Samuel E. Wyly, U.S. Bankruptcy Court, Northern District of Texas, No. 14-35043.

The SEC case is U.S. Securities and Exchange Commission v. Wyly et al, U.S. District Court, Southern District of New York, 10-5760. (Reporting by Joseph Ax; Editing by David Gregorio)

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Detroit can survive after bankruptcy but large risks loom -expert

By Karen Pierog

DETROIT Wed Oct 22, 2014 1:45pm EDT

DETROIT Oct 22 (Reuters) - Detroit's relatively fast move through municipal bankruptcy has resulted in costly creditor settlements and too little emphasis on fixing the city's broken operations, a restructuring expert testified in U.S. Bankruptcy Court on Wednesday.

Still, Martha Kopacz, who was appointed by Judge Steven Rhodes to assess the viability of Detroit's plan to restructure $18 billion of debt and obligations, concluded the plan is feasible and that its underlying revenue and other assumptions are reasonable.

"It's likely that the city of Detroit after confirmation of the plan of adjustment is able to sustainably provide basic services to the city without a significant probability of default," she testified.

She gave the plan a passing grade, saying problems could emerge from the city council's budget, low training of staff, pension funding and other issues.

Kopacz, a senior managing director at Phoenix Management in Boston, also said that the money the city will borrow to help it exit the largest-ever municipal bankruptcy and begin rebuilding "will enable the city to resolve its bad borrowing procedures and bad financial decisions of the past."

"The debt is a means to an end," she said, and then added a note of caution. "I believe we are on the edge of what the city could reasonably service in the future."

Detroit, which filed for bankruptcy in July 2013, is on track to leave court much sooner than other recent municipal bankruptcies if Rhodes determines the city's plan is fair to creditors and feasible to implement. The judge has said he will announce his ruling late in the first week of November.

Kopacz said the fast pace of the bankruptcy process helped turn the focus of Detroit and its creditors to the city's balance sheet and away from its operations. Also, the pace may have contributed to better recoveries for creditors through mediation, she said, noting the cost of the settlements "has pushed the plan to the skinny end of feasibility."

Court-ordered mediation resulted in settlements with all of Detroit's major creditors, including city retirees and pension funds. That deal involves the so-called Grand Bargain, which creates a pool of money from foundations, the Detroit Institute of Arts and the state of Michigan to ease pension cuts and protect city art work from being sold to pay creditors.

Kopacz said the plan fixes the amount the city must pay for its pensions over the next 10 years.

"The concern that I have is if the city doesn't monitor the obligation that is going to be there in 2023 and beyond, they could wake up to a bad nightmare not unlike what they have at this point."

She also told Rhodes that the city must integrate the plan into the city budget and have a score card to keep track of restructuring and reinvestment initiatives.

Kopacz, who testified for more than two hours, said projections for Detroit's income, property and casino taxes, as well as revenue-sharing from the state of Michigan, face some risks but are reasonable.

On Monday, Detroit will wrap up the confirmation hearing that began on Sept. 2 with closing arguments from its attorneys and those representing other proponents of the plan. (Additional reporting by Peter Suciu in Detroit and Lisa Lambert in Washington; editing by Matthew Lewis)

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Brazil OKs bankruptcy protection petition for Batista unit MMX Sudeste

BRASILIA Wed Oct 22, 2014 7:47pm EDT

BRASILIA Oct 22 (Reuters) - A Brazilian court has approved a bankruptcy protection petition filed by MMX Sudeste Mineracao SA, an iron-ore mining company controlled by Brazilian tycoon Eike Batista, the company said on Wednesday in a securities filing.

It was the third time in a year that a unit of the former billionaire's EBX industrial group has sought protection from creditors. The decision was taken by a court in Belo Horizonte in the Minas Gerais state.

MMX Sudeste made the request after negotiations with creditors and efforts to seek new investors failed, MMX said in a filing on Oct. 15.

MMX Sudeste holds nearly all the significant assets of Batista's MMX Mineracao e Metalicos SA, part of an EBX mining, oil, energy, shipbuilding and port group that suffered a spectacular collapse in 2013.

The MMX Sudeste petition will probably determine if parent MMX can continue as a viable company. Delays in developing MMX iron ore mines in Minas Gerais and an iron ore terminal near Rio de Janeiro have crimped MMX revenue while increasing debt.

The move comes as a decade-long commodities boom ends. The price of iron ore .IO62-CNI=SI has fallen to around its lowest level in five years as China's economy weakens and demand for minerals drops. (Reporting by Anthony Boadle; Editing by Diane Craft)

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Apple, GT strike deal to unseal info, shutter Arizona plant

Tue Oct 21, 2014 5:09pm EDT

Oct 21 (Reuters) - Apple Inc and GT Advanced Technologies Inc have struck an agreement to shutter a key Arizona factory and allow the Apple supplier to explain the circumstances leading up to its abrupt bankruptcy filing, a lawyer for GT told a court on Tuesday.

Scant details have emerged since GT Advanced, which was to have been a major supplier of scratch-resistant sapphire to Apple, filed for bankruptcy on Oct. 6, triggering speculation as to what may have soured its relationship with the iPhone maker and torpedoed its prospects.

GT Advanced has cited strict confidentiality requirements in Apple contracts that carry fines of $50 million if violated. On Tuesday, its lawyers told a bankruptcy hearing they had reached an agreement with Apple that would allow them to disclose most information pertinent to its bankruptcy.

Under that deal, the two companies had agreed to part ways, and GT Advanced can start shuttering a plant in Mesa, Arizona that Apple had helped finance in return for exclusive supply of sapphire. Apple will get an undisclosed portion of the proceeds from sales of furnaces in that plant, the lawyers said. (Reporting by Nick Brown; Editing by Chris Reese)

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UPDATE 2-Apple, supplier GT strike deal to unseal info, shutter Arizona plant

Tue Oct 21, 2014 5:49pm EDT

(Adds details of the agreement)

By Nick Brown and Noel Randewich

Oct 21 (Reuters) - Apple and GT Advanced Technologies Inc struck an agreement on Tuesday that will let GT begin the shutdown of key Arizona operations, and shed some more light on why the former stock market darling abruptly filed for bankruptcy this month.

A lawyer for GT, Apple's erstwhile sapphire supplier, described the deal at a hearing in U.S. Bankruptcy Court in Springfield, Massachusetts, saying it would save the company money and allow it to be more open about its mysterious Chapter 11 filing on October 6.

Scant details have emerged since the filing, which wiped out most of GT's market value and triggered speculation as to what may have soured its relationship with Apple.

It remains unclear how much information GT would get to reveal under Tuesday's agreement, which was described verbally by GT's lawyer but has not been fully outlined in court filings.

GT's bankruptcy hearings have drawn the attention of industry experts seeking insight into how the world's most valuable technology company runs its famously secretive production and supply chain that stretches from China to the United States. Apple is known for exacting standards and demands that often leave suppliers little room for profitability.

Key court filings revealing the reasons for GT's bankruptcy - routine in most Chapter 11 cases - have been filed with the court in secret. GT Advanced had cited confidentiality requirements in its Apple contracts which, if violated, carry fines of $50 million.

On Tuesday, lawyers for both companies reached a deal that will let GT begin selling more than 2,000 furnaces installed at a plant in Mesa, Arizona, that Apple financed. The iPhone maker will get an undisclosed portion of any proceeds. Luc Despins, an attorney for GT, described the deal as an "amicable parting of the ways" between the companies, avoiding litigation.

In conjunction with the deal, GT would reveal more detail about what caused it to go bankrupt.

But parties who have demanded transparency - including the state of New Hampshire, where GT is based - voiced lingering skepticism during the hearing, saying it remains unclear how much information the public will get, or when.

GT hopes to file more detail on the settlement by Friday, Despins said. The deal is tentatively scheduled for a court approval hearing in November.

The original request to keep documents secret underscores the highly unusual nature of the case, starting with a bankruptcy filing that caught everyone from Wall Street to Apple itself off guard.

At the heart of GT's abrupt bankruptcy filing was a deal struck with Apple in November 2013. GT Advanced was to have used the Arizona plant to make scratch-resistant sapphire exclusively for Apple. That sapphire was to have eventually found its way into future mobile devices, such as iPhones - where it's already in use in their fingerprint sensors - or the upcoming Apple Watch.

But, sources and analysts say, GT Advanced was not hitting the required production targets as set out in its original agreement with Apple. (Reporting by Nick Brown in New York and Noel Randewich in San Francisco; Editing by Tom Brown, G Crosse and Jonathan Oatis)

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BRIEF-Permanent TSB Group says to sell Springboard's mortgage loan book

Wed Oct 22, 2014 5:04am EDT

* Mortgage loan book comprises gross assets of approximately eur 468 million, eur 350 million of which are non-performing

* Springboard has agreed to sell its mortgage loan book to Mars Capital Ireland No.2 Ltd

* Impact on group's profit and loss account and core equity tier 1 capital ratio will be positive Source text for Eikon: Further company coverage:

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UPDATE 1-Brazil's GVO bonds sink on restructuring fears

Mon Oct 20, 2014 4:31pm EDT

(Adds Fitch downgrades GVO two notches to CC)

By Davide Scigliuzzo

NEW YORK, Oct 20 (IFR) - Grupo Virgolino de Oliveira (GVO) bonds slid deeper into distressed territory Monday as the cash-strapped Brazilian sugar and ethanol giant gets pushed closer toward debt restructuring.

GVO's unsecured notes, the 10.5% US$300m 2018s and 11.75% US$300m 2022s, were trading at just 20 cents to the dollar after the company appointed legal and financial advisors and said it was taking steps to strengthen its capital structure.

The unsecured bonds had already plunged by more than 30 points last week as fears of a restructuring intensified.

GVO's 10.875% US$135m secured notes maturing in 2020, issued just four months ago, were quoted at a bid-offer cash price of 35-45, a trader said - losing half their value in a week.

"The group is engaging in close discussions and negotiations with potential new and current investors, as well as discussing with its creditors alternatives for its capital structure," the company said Sunday.

"With these measures, the group is confident that it will be able to face the difficult period which the sector is going through, thereby continuing its century-old story of success."

The trader said the bondholders and company would likely do all they can to keep the business as a going concern and avoid a long drawn-out bankruptcy.

"But they need cash," the trader said. "And who is going to put up the cash?"

Either an equity injection from shareholders or a loan from new investors could be viable options, though the latter could put the existing bonds under more pressure.

This is because any new debt would most likely be more senior in the capital structure, the trader said.

"Whoever does that is going to ask for the world - and everyone would need to agree it," he told IFR.

Fitch downgraded the company two notches to CC on Monday, warning that the negotiations "could lead to the conversion of debt to equity and/or the write-down of existing debt obligations."

The company is rated B3 with a stable outlook by Moody's and B with a negative outlook by S&P.

TURNAROUND HOPES

The sugar and ethanol sector has been hit hard in recent years by both the steady decline of sugar prices and the Brazilian government's oil subsidies, which make ethanol less competitive.

Only a small number of firms with larger cash buffers have been more resilient.

Tonon's unsecured 2020s and secured 2024 notes were trading at cash prices of around 80 and 92 respectively on Monday, for example, while USJ's unsecured 2019s were quoted at around 90.

"Tonon and USJ have enough cash to get through this cycle, but we are not seeing a big rebound in sugar prices - and they all need that to be able to survive," the trader said.

Some pin hopes for a turnaround in the sector to opposition candidate Aecio Neves, who faces incumbent President Dilma Rousseff in a run-off election this weekend.

Neves has pledged a number of reforms in the oil and gas sector, including raising heavily subsidized fuel prices, which would make ethanol more competitive at the pump.

"It's a travesty what's happening in the sector," said a syndicate official at a Brazilian bank, who argued a Neves victory would provide a much-needed boost for the industry.

GVO has appointed Moelis & Co as financial advisor and Santos Neto Advogados and Kirkland & Ellis LLP as legal advisors.

A spokesperson for GVO did not immediately answer requests for comment. (Reporting by Davide Scigliuzzo; Editing by Natalie Harrison)

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UPDATE 2-Texas investor Sam Wyly files for bankruptcy after losing SEC fraud case

Mon Oct 20, 2014 5:56pm EDT

(Adds details on dispute over offshore assets, bankruptcy hearing on Wednesday, comment from expert, background on case)

By Nate Raymond and Joseph Ax

NEW YORK Oct 20 (Reuters) - Texas tycoon Sam Wyly has filed for bankruptcy, saying he does not have the assets to pay the nearly $300 million that U.S. regulators are demanding for his role in a fraudulent offshore scheme.

In documents filed with a U.S. bankruptcy court in Dallas on Sunday, Wyly said he had between $100 million and $500 million of both assets and liabilities and cited the "massive costs" of fighting civil claims from the U.S. Securities and Exchange Commission (SEC) as the reason for seeking Chapter 11 protection.

Last month, U.S. District Judge Shira Scheindlin in New York ordered Wyly and the estate of his late brother Charles to pay damages of $187.7 million plus interest to the SEC, after a jury found them liable for fraud in May.

The SEC has since said the total, including interest, should be $299.4 million, which is one of the largest awards ever sought from individual defendants in a U.S. court.

Wyly, 80, appeared on Forbes' list of the 400 richest Americans in 2010, with a net worth of $1 billion.

In the filing, Wyly said he had spent $100 million in legal fees responding to probes from the SEC and the Internal Revenue Service.

Robert Gemmill, a spokesman for Wyly, said he would not comment beyond the bankruptcy filing. An SEC spokesman declined to comment.

U.S. Bankruptcy Judge Barbara Houser scheduled an initial hearing for Wednesday.

The SEC accused the brothers of constructing a complex system of trusts in the Isle of Man that netted them $553 million in untaxed profits through more than a decade of hidden trades in four companies they controlled.

Those companies included Sterling Software Inc, Michaels Stores Inc, Sterling Commerce Inc and Scottish Annuity & Life Holdings Ltd, now Scottish Re Group Ltd.

Charles Wyly died in a 2011 car crash, and his estate was substituted as a defendant.

The SEC and the Wylys have been fighting over whether the securities regulator may collect money still held in the offshore trusts.

Lawyers for the Wylys have argued that those assets, worth about $380 million, are controlled by the trusts' beneficiaries, including the Wylys' children.

In a court filing last week, the SEC said the trusts' assets are the property of Sam and Charles Wyly.

"The SEC continues to believe that Sam and the estate of Charles Wyly have sufficient global assets to pay any judgment," the filing said.

A lawyer for Sam Wyly, Steven Shepard, warned Scheindlin in August that a massive judgment would bankrupt his client.

It was not immediately clear whether the bankruptcy filing could allow Wyly to reduce his debt to the SEC.

Debts incurred through fraud are typically not eligible for reduction in bankruptcy proceedings, said Jonathan Lipson, a Temple University law professor with expertise in bankrtupcy law. It is theoretically possible, though, for Chapter 11 debtors to reduce such debts with a judge's approval, Lipson said.

The case is In re Samuel E. Wyly, U.S. Bankruptcy Court, Northern District of Texas, No. 14-35043. (Reporting by Nate Raymond and Joseph Ax; Writing by Joseph Ax; Editing by Cynthia Osterman, David Ingram and Diane Craft)

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CORRECTED-U.N. officials tour Detroit to assess impact of water shutoffs

Mon Oct 20, 2014 6:16pm EDT

(Corrects first paragraph to make clear tour started on Saturday and finished on Monday instead of began on Monday)

By Serena Maria Daniels

DETROIT Oct 20 (Reuters) - Two United Nations human rights officials on Monday finished a tour of Detroit to assess the impact of widespread water disconnections on residents in an effort by city officials to shore up some $90 million in overdue bills.

During their three-day tour, housing and sanitation experts Leilani Farha and Catarina de Albuquerque met with affected residents, civil rights activists and local officials after the U.N. called the shutoffs "an affront to human rights" this summer.

This summer Detroit began to pare down $90 million in overdue bills.

Customers who owe more than $150 or who are 60 days late in payment are in jeopardy of getting their water shutoff, according to the water and sewer department.

According to the United Nations estimates, more than 27,000 customers have had water service disconnected in 2014. After 19,000 homes lost water access this summer, people from across the U.S. sent gallon jugs to the city and residents protested in the streets.

On Monday, the two U.N. officials met with Mayor Mike Duggan to discuss the shutoffs. In August, Duggan suspended shutoffs for a month and implemented a plan to help low-income customers pay their bills.

The U.N. officials are recommending the city cease shutoffs until an affordability program is implemented for low-income residents and to enact policies to address the needs of the city's most vulnerable residents. They also are recommending city leaders assess the impact or widespread water shutoffs on their own.

De Albuquerque and Farha said the shutoffs disproportionately impacts the city's low-income and black population and unfairly forces residences to choose between paying for housing or paying for water service.

"What we have here is a man-made perfect storm," said de Albuquerque said.

The U.N. visit comes after U.S. Bankruptcy Judge Steven Rhodes, who is overseeing Detroit's historic bankruptcy proceedings, refused in September a request by activists for a six-month moratorium against the shut-offs.

Rhodes said a moratorium would have put in jeopardy a $4.5 million water affordability fund and a cap on rate increases. (Reporting by Serena Maria Daniels in Detroit; Editing by Brendan O'Brien and Sandra Maler)

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UPDATE 2-Trump Atlantic City casino gets court OK to break labor deal

Fri Oct 17, 2014 5:08pm EDT

(Adds union saying it will picket the Taj Mahal, paragraphs 1 and 5)

By Tom Hals

Oct 17 (Reuters) - The bankrupt Trump Taj Mahal casino received court approval on Friday to break its labor agreement, a key condition for a rescue deal with billionaire Carl Icahn, and the union promptly announced a plan to picket the Atlantic City, New Jersey hotel.

Parent company Trump Entertainment Resorts Inc has said trimming $14.6 million from its annual union pension and healthcare costs is key to save the casino from becoming the fifth to close this year in the seaside resort.

U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, said during a hearing that he would approve the request and would explain his reasoning in a written opinion next week.

The Unite Here Local 54 union will appeal the ruling, the union's lawyer, Kathy Krieger of the law firm James & Hoffman, told the court.

Facing competition from gambling venues in nearby states, four casinos have closed this year in the seaside resort, including Trump Entertainment's smaller Atlantic City casino, Trump Plaza. The Taj Mahal employs more than 3,000 and about a third are union members.

The union said it plans to picket the Taj Mahal on Oct. 24.

"We intend to continue to fight this both in the courts and in the streets," said a statement from the union's president, Bob McDevitt, who blamed Icahn for the loss of worker benefits.

"He has a long history of eliminating, reducing or freezing worker benefits which sometimes saddles government agencies with the burden of cleaning up the mess," said McDevitt.

The union also represents workers at the eight remaining casinos, including the Tropicana, which is controlled by an Icahn affiliate. Earlier this month, hundreds of workers blocked traffic in the city to protest the move to end union benefits at the Taj Mahal and more than 20 people were arrested.

Icahn, who is Trump Entertainment's lender and controls the company's cash, has rejected the union's criticism. He is owed $292 million, a portion of which he plans to convert into ownership of the casino.

Icahn has said he was presented the rescue plan by Trump Entertainment and asked to provide a $100 million investment if the company achieved its labor cost cuts. The rescue plan also requires tax concessions by the city and state, which politicians have refused to endorse.

Trump Entertainment has offered to move employees to defined contribution 401k savings plans and increase pay by $2,000 annually to defray health insurance costs.

Real estate developer and reality TV celebrity Donald Trump has said he no longer has a stake in the company that bears his name, which is going through its fifth bankruptcy.

The case is In Re: Trump Entertainment Resorts Inc, U.S. Bankruptcy Court, District of Delaware, No. 14-12103 (Reporting by Tom Hals in Wilmington, Delaware; Editing by Diane Craft and David Gregorio)

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Delaware high court says GM loan documents valid despite error

Fri Oct 17, 2014 9:10pm EDT

Oct 17 (Reuters) - The Delaware Supreme Court said on Friday that creditors are entitled to rely on formal loan documents authorized by secured lenders, even if there is a mistake in the documents.

The court was responding to a question from a New York federal appeals court relating to a dispute between creditors of General Motors before its 2009 bankruptcy and its former lender, JPMorgan Chase & Co.

The issue relates to GM's insolvency, in which its healthy assets were sold to the new General Motors Co, while the rest were liquidated for the benefit of unsecured creditors.

GM's unsecured creditors' committee claimed JPMorgan and other holders of a syndicated $1.5 billion term loan extinguished their lien on GM's assets, freeing up the assets to unsecured creditors. JPMorgan said neither it nor GM intended to nix the lien.

"Parties in commerce are entitled to rely upon a filing authorized by a secured lender and assume that the secured lender intends the plain consequences of its filing," the court said in it opinion.

JPMorgan and GM could not immediately be reached for comment.

In 2013 unsecured creditors lost when a bankruptcy court ruled in favor of JPMorgan, saying its error did not rise to the express authorization required under Delaware's Uniform Commercial Code.

The case was then appealed to the 2nd Circuit U.S. Court of Appeals, which referred it to the Delaware Supreme Court for its opinioin on what constitutes authorization under UCC.

According to court papers, freeing up the JPMorgan collateral could boost unsecured creditors' recoveries by 2 to 3 percent.

However, it is still unclear whether the creditor group would be entitled to any money as the U.S. Treasury, which bailed out GM, has asserted a lien over litigation proceeds.

The case is In re: Motors Liquidation Co, in the Delaware Supreme Court, No. 325, 2014.

The underlying case is In re: Motors Liquidation Co, U.S. Bankruptcy Court, Southern District of New York, No. 09-50026. (Reporting By Kanika Sikka in Bangalore; Editing by Alan Crosby)

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Saudi contractor MMG says board approves recovery plan

KHOBAR, Saudi Arabia Sun Oct 19, 2014 9:35am EDT

KHOBAR, Saudi Arabia Oct 19 (Reuters) - Saudi contractor Mohammad Al-Mojil Group's (MMG) board had approved a recovery plan that use most of its existing capital base to pay off debts and new cash raised through a share issue, it said on Sunday.

The firm, which got into difficulty after over-extending itself trying to take advantage of a boom in construction in the kingdom, has not traded on the Saudi bourse since July 2012, when its shares were suspended by the regulator after breaching rules relating to accumulated losses.

MMG said in September its accumulated losses for the period ending Aug. 31 stood at 2.689 billion riyals ($717.1 million), equivalent to 215 percent of its paid-up capital. Saudi shares are suspended once losses pass 75 percent of capital.

Under the plan approved at a board meeting on Thursday, MMG's capital will be cut from 1.25 billion riyals to 125 million riyals, creating one share for every 10 shares currently possessed, it said in a bourse filing.

Such an accountancy technique will allow the company to effectively write off some of its accumulated losses.

At a later stage, it said, its board will recommend increasing the capital again via a rights issue and/or through preferred shares to help it restructure its operations.

Also part of the plan would be a "significant reduction" in the amount payable to the lenders in respect of outstanding sharia-compliant loan facilities, it said.

All these steps would be subject to the outcome of negotiations with potential new investors, existing lenders and regulatory approval, the statement said.

Should the restructuring go ahead, it is hoped that all legacy projects would be completed in the first quarter of 2015, allowing the business to return to profitability in subsequent quarters as it takes on new business opportunities, MMG added.

(1 US dollar = 3.7500 Saudi riyal) (Reporting by Reem Shamseddine; Editing by David French and Susan Thomas)

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UPDATE 2-Trump Atlantic City casino gets court OK to break labor deal

Fri Oct 17, 2014 5:08pm EDT

(Adds union saying it will picket the Taj Mahal, paragraphs 1 and 5)

By Tom Hals

Oct 17 (Reuters) - The bankrupt Trump Taj Mahal casino received court approval on Friday to break its labor agreement, a key condition for a rescue deal with billionaire Carl Icahn, and the union promptly announced a plan to picket the Atlantic City, New Jersey hotel.

Parent company Trump Entertainment Resorts Inc has said trimming $14.6 million from its annual union pension and healthcare costs is key to save the casino from becoming the fifth to close this year in the seaside resort.

U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, said during a hearing that he would approve the request and would explain his reasoning in a written opinion next week.

The Unite Here Local 54 union will appeal the ruling, the union's lawyer, Kathy Krieger of the law firm James & Hoffman, told the court.

Facing competition from gambling venues in nearby states, four casinos have closed this year in the seaside resort, including Trump Entertainment's smaller Atlantic City casino, Trump Plaza. The Taj Mahal employs more than 3,000 and about a third are union members.

The union said it plans to picket the Taj Mahal on Oct. 24.

"We intend to continue to fight this both in the courts and in the streets," said a statement from the union's president, Bob McDevitt, who blamed Icahn for the loss of worker benefits.

"He has a long history of eliminating, reducing or freezing worker benefits which sometimes saddles government agencies with the burden of cleaning up the mess," said McDevitt.

The union also represents workers at the eight remaining casinos, including the Tropicana, which is controlled by an Icahn affiliate. Earlier this month, hundreds of workers blocked traffic in the city to protest the move to end union benefits at the Taj Mahal and more than 20 people were arrested.

Icahn, who is Trump Entertainment's lender and controls the company's cash, has rejected the union's criticism. He is owed $292 million, a portion of which he plans to convert into ownership of the casino.

Icahn has said he was presented the rescue plan by Trump Entertainment and asked to provide a $100 million investment if the company achieved its labor cost cuts. The rescue plan also requires tax concessions by the city and state, which politicians have refused to endorse.

Trump Entertainment has offered to move employees to defined contribution 401k savings plans and increase pay by $2,000 annually to defray health insurance costs.

Real estate developer and reality TV celebrity Donald Trump has said he no longer has a stake in the company that bears his name, which is going through its fifth bankruptcy.

The case is In Re: Trump Entertainment Resorts Inc, U.S. Bankruptcy Court, District of Delaware, No. 14-12103 (Reporting by Tom Hals in Wilmington, Delaware; Editing by Diane Craft and David Gregorio)

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Detroit bankruptcy case winds down, leaving loose ends to tie up

By Lisa Lambert

DETROIT Fri Oct 17, 2014 3:54pm EDT

DETROIT Oct 17 (Reuters) - Closing arguments in the hearing on Detroit's landmark bankruptcy are just days away, leaving odds and ends for the city, its creditors and U.S. Bankruptcy Judge Steven Rhodes to resolve.

After closing arguments, expected on Wednesday, Rhodes will have to determine if the city's plan to adjust $18 billion in debt and obligations and exit the biggest-ever municipal bankruptcy is fair to creditors and feasible for the city to follow.

On Friday, Rhodes heard arguments on a claim from the American Federation of State, County and Municipal Employees union that the city owes its members pension money from 2011.

In the past, when Detroit's retirement systems achieved annual investment returns of more than 7.9 percent, they gave employees credits toward a special annuity account, retirees an extra pension payment known as a "13th check," and lowered the city's required contribution.

The union has said it is due damages from a city ordinance change in 2011 prohibiting 13th checks and annuity credits, but Detroit contends the grievance is not part of the bankruptcy case and that its plan of adjustment addresses legitimate pension claims.

Rhodes, who began a hearing on Detroit's plan on Sept. 2, will announce a decision on the AFSCME complaint on Monday, before another hearing on objections filed by city library and Cobo Hall convention center employees and unions.

Meanwhile, institutions holding $1 billion of Detroit pension certificates of participation (COPs) are deciding whether to opt into a proposed settlement that the insurer of the COPS, Financial Guaranty Insurance Co, reached with Detroit this week.

If the institutions do not approve the settlement, they will remain objectors to the plan and present a closing statement at the trial. In that case, they would argue the plan favors some creditors over others, according to the COPs holders' attorney, Thomas Moers Mayer, putting pressure on Rhodes' determination if the plan is fair.

A FGIC spokesman said he expected an update on the COPS vote to be announced Tuesday.

Detroit's monumental settlement with FGIC now moves to the city council for a vote on Tuesday.

(Reporting By Lisa Lambert; Editing by Steve Orlofsky)

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Delaware high court says GM loan documents valid despite error

Fri Oct 17, 2014 9:10pm EDT

Oct 17 (Reuters) - The Delaware Supreme Court said on Friday that creditors are entitled to rely on formal loan documents authorized by secured lenders, even if there is a mistake in the documents.

The court was responding to a question from a New York federal appeals court relating to a dispute between creditors of General Motors before its 2009 bankruptcy and its former lender, JPMorgan Chase & Co.

The issue relates to GM's insolvency, in which its healthy assets were sold to the new General Motors Co, while the rest were liquidated for the benefit of unsecured creditors.

GM's unsecured creditors' committee claimed JPMorgan and other holders of a syndicated $1.5 billion term loan extinguished their lien on GM's assets, freeing up the assets to unsecured creditors. JPMorgan said neither it nor GM intended to nix the lien.

"Parties in commerce are entitled to rely upon a filing authorized by a secured lender and assume that the secured lender intends the plain consequences of its filing," the court said in it opinion.

JPMorgan and GM could not immediately be reached for comment.

In 2013 unsecured creditors lost when a bankruptcy court ruled in favor of JPMorgan, saying its error did not rise to the express authorization required under Delaware's Uniform Commercial Code.

The case was then appealed to the 2nd Circuit U.S. Court of Appeals, which referred it to the Delaware Supreme Court for its opinioin on what constitutes authorization under UCC.

According to court papers, freeing up the JPMorgan collateral could boost unsecured creditors' recoveries by 2 to 3 percent.

However, it is still unclear whether the creditor group would be entitled to any money as the U.S. Treasury, which bailed out GM, has asserted a lien over litigation proceeds.

The case is In re: Motors Liquidation Co, in the Delaware Supreme Court, No. 325, 2014.

The underlying case is In re: Motors Liquidation Co, U.S. Bankruptcy Court, Southern District of New York, No. 09-50026. (Reporting By Kanika Sikka in Bangalore; Editing by Alan Crosby)

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Detroit bankruptcy case winds down, leaving loose ends to tie up

By Lisa Lambert

DETROIT Fri Oct 17, 2014 3:54pm EDT

DETROIT Oct 17 (Reuters) - Closing arguments in the hearing on Detroit's landmark bankruptcy are just days away, leaving odds and ends for the city, its creditors and U.S. Bankruptcy Judge Steven Rhodes to resolve.

After closing arguments, expected on Wednesday, Rhodes will have to determine if the city's plan to adjust $18 billion in debt and obligations and exit the biggest-ever municipal bankruptcy is fair to creditors and feasible for the city to follow.

On Friday, Rhodes heard arguments on a claim from the American Federation of State, County and Municipal Employees union that the city owes its members pension money from 2011.

In the past, when Detroit's retirement systems achieved annual investment returns of more than 7.9 percent, they gave employees credits toward a special annuity account, retirees an extra pension payment known as a "13th check," and lowered the city's required contribution.

The union has said it is due damages from a city ordinance change in 2011 prohibiting 13th checks and annuity credits, but Detroit contends the grievance is not part of the bankruptcy case and that its plan of adjustment addresses legitimate pension claims.

Rhodes, who began a hearing on Detroit's plan on Sept. 2, will announce a decision on the AFSCME complaint on Monday, before another hearing on objections filed by city library and Cobo Hall convention center employees and unions.

Meanwhile, institutions holding $1 billion of Detroit pension certificates of participation (COPs) are deciding whether to opt into a proposed settlement that the insurer of the COPS, Financial Guaranty Insurance Co, reached with Detroit this week.

If the institutions do not approve the settlement, they will remain objectors to the plan and present a closing statement at the trial. In that case, they would argue the plan favors some creditors over others, according to the COPs holders' attorney, Thomas Moers Mayer, putting pressure on Rhodes' determination if the plan is fair.

A FGIC spokesman said he expected an update on the COPS vote to be announced Tuesday.

Detroit's monumental settlement with FGIC now moves to the city council for a vote on Tuesday.

(Reporting By Lisa Lambert; Editing by Steve Orlofsky)

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UPDATE 2-Trump Atlantic City casino gets court OK to break labor deal

Fri Oct 17, 2014 5:08pm EDT

(Adds union saying it will picket the Taj Mahal, paragraphs 1 and 5)

By Tom Hals

Oct 17 (Reuters) - The bankrupt Trump Taj Mahal casino received court approval on Friday to break its labor agreement, a key condition for a rescue deal with billionaire Carl Icahn, and the union promptly announced a plan to picket the Atlantic City, New Jersey hotel.

Parent company Trump Entertainment Resorts Inc has said trimming $14.6 million from its annual union pension and healthcare costs is key to save the casino from becoming the fifth to close this year in the seaside resort.

U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, said during a hearing that he would approve the request and would explain his reasoning in a written opinion next week.

The Unite Here Local 54 union will appeal the ruling, the union's lawyer, Kathy Krieger of the law firm James & Hoffman, told the court.

Facing competition from gambling venues in nearby states, four casinos have closed this year in the seaside resort, including Trump Entertainment's smaller Atlantic City casino, Trump Plaza. The Taj Mahal employs more than 3,000 and about a third are union members.

The union said it plans to picket the Taj Mahal on Oct. 24.

"We intend to continue to fight this both in the courts and in the streets," said a statement from the union's president, Bob McDevitt, who blamed Icahn for the loss of worker benefits.

"He has a long history of eliminating, reducing or freezing worker benefits which sometimes saddles government agencies with the burden of cleaning up the mess," said McDevitt.

The union also represents workers at the eight remaining casinos, including the Tropicana, which is controlled by an Icahn affiliate. Earlier this month, hundreds of workers blocked traffic in the city to protest the move to end union benefits at the Taj Mahal and more than 20 people were arrested.

Icahn, who is Trump Entertainment's lender and controls the company's cash, has rejected the union's criticism. He is owed $292 million, a portion of which he plans to convert into ownership of the casino.

Icahn has said he was presented the rescue plan by Trump Entertainment and asked to provide a $100 million investment if the company achieved its labor cost cuts. The rescue plan also requires tax concessions by the city and state, which politicians have refused to endorse.

Trump Entertainment has offered to move employees to defined contribution 401k savings plans and increase pay by $2,000 annually to defray health insurance costs.

Real estate developer and reality TV celebrity Donald Trump has said he no longer has a stake in the company that bears his name, which is going through its fifth bankruptcy.

The case is In Re: Trump Entertainment Resorts Inc, U.S. Bankruptcy Court, District of Delaware, No. 14-12103 (Reporting by Tom Hals in Wilmington, Delaware; Editing by Diane Craft and David Gregorio)

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