Bankrupt fire truck maker American LaFrance LLC (AFL) has sued its former owner, Daimler Trucks North America LLC, alleging that Daimler breached agreements it entered into when it sold off American LaFrance’s assets, Bankruptcy Law360 reported yesterday. ALF’s complaint, filed June 19 in the U.S. Bankruptcy Court for the District of Delaware, also asks the court to disallow a claim of about $12 million filed by Daimler Trucks, formerly known as Freightliner LLC. Freightliner owned AFL from 1995 to 2005. According to the complaint, when Freightliner sold its ALF assets so that ALF could operate independently, it entered into two agreements: an asset purchase agreement and a transition services agreement in which it pledged to help ALF with the transition. During the transition, Freightliner attempted to undermine ALF by failing to disclose necessary information, interfering with ALF’s customer relationships and overcharging ALF for services, according to the complaint.

Whitehall Jewelers Holdings Inc. filed for bankruptcy yesterday, becoming the latest jewelry retailer to seek court protection as the sagging U.S. economy cuts into consumers’ discretionary spending, Reuters reported. The company, which operates stores under such names as Whitehall and Lundstrom, is seeking to sell itself by July 18, according to an affidavit from its CFO. Whitehall said that it operates 373 retail stores in 39 U.S. states, and employs 2,852 people. The company said that its store base includes 78 locations it bought in April from Friedman’s Inc, a jewelry retailer that sought bankruptcy protection earlier this year, and which later began liquidating. 

Acting U.S. Trustee Roberta A. DeAngelis objected to Linens ‘n Things Inc.’s motion for approval of a severance plan for certain noninsider store-level employees, arguing that it lacks adequate details and that the debtors have not acknowledged relevant legal precedent on severance pay, Bankruptcy Law360 reported yesterday. The debtors did not attach a copy of the severance plan to the motion, or include information about the identity of the specific individuals the plan would cover, the participants’ respective salaries, the length of their tenure with the company, or whether the participants are covered under any other bonus programs, the trustee contends. In addition to failing to provide enough information to properly evaluate the plan, the objection said that the debtors aren’t acknowledging the new limitations imposed by the Bankruptcy Code, or controlling Third Circuit law that bars or limits the debtors from paying employees severance as an administrative expense based on a length-of-service calculation, where the work that forms the basis of the payment occurred prepetition.

Fremont General Corp., the former subprime lending giant that regulators forced out of the mortgage business last year, said Friday that it probably would seek bankruptcy protection to hasten its liquidation of assets, the Los Angeles Times reported on Saturday. Fremont General said that its board would wait to make the bankruptcy filing until regulators approved the sale of its retail business to commercial lender CapitalSource Inc. of Chevy Chase, Md. The retail operation includes 22 Fremont Investment & Loan offices in California and $5.6 billion in deposits. When the deal was announced last month, CapitalSource officials said that the branches would stay open with many of the same employees and no changes in interest rates or other terms of existing certificates of deposit or other accounts.

General Motors Corp., the biggest U.S. automaker, agreed to provide as much as $200 million to help American Axle & Manufacturing Holdings Inc. end a two-month strike that has idled all or part of 33 GM plants, Bloomberg News reported yesterday. The aid will be used for costs such as early retirements and buyouts of union workers at the supplier, GM said yesterday in a U.S. regulatory filing. The United Auto Workers walkout at American Axle, GM’s largest axle supplier, cut the automaker’s production by 230,000 vehicles through April and cost $800 million in the first quarter, GM said. The strike began Feb. 26.

Bondholders who are owed hundreds of millions of dollars by Tropicana Entertainment LLC asked a judge to put the casino operator under the control of a court-appointed administrator, saying the company’s leader steered it into financial distress, the Wall Street Journal reported today.  The bondholders asked Bankruptcy Judge Kevin Carey to put the company under the control of a chapter 11 trustee, saying that Tropicana Entertainment CEO William J. Yung shouldn’t be allowed “unfettered control over a significant chapter 11 proceeding involving a multi-jurisdictional, highly regulated gaming enterprise with over $2.5 billion of creditor claims.” The bondholders account for more than $700 million of Tropicana’s debt. The group includes Citigroup Global Markets, Harbinger Capital Partners, Highland Capital Management, Lehman Brothers Holdings Inc. and a Merrill Lynch & Co. unit.

Securities regulators refused a congressional request to disclose why they dropped an investigation into whether Bear Stearns Cos. harmed investors by improperly valuing complex debt securities, the Wall Street Journal reported today. The Securities and Exchange Commission cited confidentiality in its decision involving the late-stage probe of the Wall Street firm. At issue is a move by the SEC to abort an enforcement case into activities at Bear Stearns several months before the firm imploded in March. The firm has agreed to be acquired for a fire-sale price by J.P. Morgan Chase & Co.

Ceres Capital Partners LLC, a firm specializing in forming structured investment vehicles (SIVs), filed for chapter 11 protection yesterday saying that it was unable to operate due to the subprime credit squeeze, Reuters reported. Ceres, which is partly owned by XL Reinsurance America Inc. and Stanfield Capital Partners, organized SIVs, including Stanfield Victoria Finance Ltd., and other packaged investment products. Ceres, which filed for bankruptcy in federal court in New York, said that although its funds had “little or no exposure to subprime mortgage risks,” it was “unable to retain access to the credit markets” and was unable to find buyers for its paper. It also said it initiated discussions with lenders including XL Capital in March that allowed it to file for a “prepackaged” bankruptcy that would allow “a swift emergence” from a court-supervised restructuring.

Capco Energy Inc., an onshore and offshore gas company, filed for chapter 11 protection last week, citing $22 million in debt owed primarily to Union Bank of California, Bankruptcy Law360 reported yesterday. The company said that it owes the bank approximately $14 million, $3.7 million of which is in the form of letters of credit issued to cover ongoing operations. Capco also cited 100 to 199 unsecured creditors claiming debt up to $10 million and listed up to $10 million in assets. Capco said its largest unsecured debt of approximately $2 million was to Hoactzin LP, who joined Capco in acquiring various oil properties. The company also cited $8 million of trade debt to vendors for goods and services.

Critics are worried that the Securities and Exchange Commission is losing its bite amid the recent financial crisis, the New York Times reported today. Wall Street and the broader business community have pushed aggressively in recent years to roll back regulation, arguing that the United States is losing its competitive edge. “There has been less emphasis on investor protection and more on this issue of the competitiveness of markets,” said Sen. Jack Reed (D- R.I.). In March, Reed and Senate Banking Committee Chair Christopher J. Dodd (D- Conn.) asked the Government Accountability Office to look into the penalties that the SEC has been levying recently. Penalties, together with the return of ill-gotten gains, fell by half in the 2007 fiscal year, to $1.6 billion. Staff lawyers in the SEC enforcement division say high turnover, tight budgets and a new, looser attitude toward corporate wrongdoing are sapping morale. The staffing and budget of the SEC have lagged far behind the explosive growth of the markets the commission must police.