The Daily Docket: Creditors Oppose Innkeepers Sale

A group of Innkeepers USA Trust creditors joined others in protesting Five Mile Capital Partners and Lehman Brothers Holdings Inc.’s $374.4 million bid to buy the hotel owner. Read the Daily Bankruptcy Review story here.

Also in today’s DBR, bankruptcy judge has blocked Garlock Sealing Technology LLC from deposing the agents managing asbestos trusts born out of several other bankruptcy cases, and the administrators of the federal court system are making preparations for a possible government shutdown that could have a wide-ranging impact on bankruptcy attorneys. In DBR Small Cap, Meridian Behavioral Health Network LLC, which says it’s Minnesota’s biggest for-profit health-care provider, filed for Chapter 11 bankruptcy protection Monday.

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The Wall Street Journal reports General Growth Properties Inc.’s loss widened as the shopping-mall owner transferred many of its properties to creditors, ending a 19-month stint in bankruptcy court.

WSJ reports Merrill Lynch & Co. unit failed to respond to “clear red flags” about possible fraud at Bernard Madoff’s firm while separately structuring investments involving Madoff feeder funds, according to a lawsuit unsealed Monday.

The proposed auction of Blockbuster Inc., the bankrupt movie-rental chain that agreed to a $290 million stalking-horse bid from a group of secured debt holders, is being opposed by Walt Disney Co., according to Bloomberg.

Georgetown law professor Adam Levitin says in Credit Slips that Borders Group Inc. bankruptcy is demonstrating what an open joke bankruptcy venue has become.