In a claim by the Pennsylvania Insurance Department against accounting firm Deloitte & Touche, the Commonwealth Court of Pennsylvania has ruled that deepening insolvency is not an independent cause of action unless a plaintiff alleges other causes of action such as professional negligence, the Legal Intelligencer reported yesterday. The court issued an unpublished opinion authored by Senior Judge James Gardner Colins in Ario v. Deloitte & Touche denying in part the firm’s motion for summary judgment based on the 3rd U.S. Circuit Court of Appeals’ 2006 decision in In re CitX Corp., where the federal court ruled deepening insolvency is not a valid theory of damages for an independent cause of action. “Deepening insolvency is an organic theory that reflects the dynamic nature of this global economy,” Colins wrote. “It recognizes the expertise of professionals to perform to the highest standards. And, where there is failure, if pled and proven, the deepening insolvency theory allows for the imposition of liability upon those professionals who through their failure to perform their duties, plunge institutions into financial despair, leaving regulatory agencies and bankruptcy courts to try and put ‘humpty dumpty’ back together again.”

Interstate Bakeries Corp. is seeking to cut costs by selling an acre of property in California for $1.6 million, subject to higher bids at auction, the Wall Street Journal reported today. The maker of Twinkies, Hostess cupcakes and Wonder bread wants to put a 0.96-acre plot of land near Santa Barbara, Calif., on the auction block at the end of the month. Marc Winnikoff has agreed to be the stalking horse, or lead bidder, with a $1.6 million offer. Interstate Bakeries has proposed that competing bidders submit offers of at least $1.7 million by May 28 for an auction to be held May 30. The U.S. Bankruptcy Court in Kansas City, Mo., will consider whether to approve a winning bidder at a hearing set for June 4.

The chapter 7 trustee overseeing the bankruptcy of Aloha Airlines Inc. and its affiliates rebuffed objections to the debtor’s attempts to reject collective bargaining arrangements and to sell off its most profitable unit, Bankruptcy Law360 reported yesterday. Interim Trustee Dane Field defended Aloha’s motions for the sale of its air cargo division to a Seattle-based holding company and for the rejection of current union agreements. The latter motion, which asks for court approval to reject the company’s six collective bargaining agreements, ran into stiff resistance from the unions that represent Aloha’s flight attendants and pilots. According to earlier court documents filed by Field, Aloha has collective bargaining agreements with unions representing 3,300 of its 3,500 employees, including pilots, flight attendants, clerical and office workers, mechanics, contract services workers and flight dispatchers. All of the agreements are currently in effect until December 2009.

Visalia, Calif.-based Pappas Telecasting Companies announced late Friday it was filing for bankruptcy protection on behalf of 13 of its television stations, the Visalia Times Delta reported on Saturday. The company said the filing decision, which includes Fresno stations KMPH Fox 26 and CW KFRE 59, will not affect employee compensation or programming. The company pointed to a slowing U.S. economy and the company’s inability to obtain new financing.

Interstate Bakeries Corp. closed on an amended debtor-in-possession (DIP) financing package that provides the maker of Wonder Bread and Hostess Twinkies with an additional $50 million and extends the maturity date to Sept. 30, Bankruptcy Law360 reported on Friday. The amended and restated DIP credit agreement with certain of the company’s existing lenders under its current DIP credit facility, other new lenders and JPMorgan Chase Bank NA (as administrative agent and collateral agent for the lenders) was approved April 29, Interstate said. The bakery revealed that it had amended the financing commitment with new and existing lenders, submitting the revamped DIP credit facility to the U.S. Bankruptcy Court for the Western District of Missouri for approval on April 18.

Many resellers of cellphone service - which lease the networks of national carriers - are closing, going bankrupt or struggling, USA Today reported today. The latest casualty is Sonopia, which helped clubs and organizations set up their own mobile services, which is shutting down. Earlier this year, Hispanic-focused Movida Communications and high-end boutique Voce filed for chapter 11. While Voce shut down, Movida was quickly purchased by Paul Greene, CEO of gear provider APC Wireless. In the past 18 months, ESPN Mobile, Disney Mobile and youth-targeted Amp’d Mobile have all shut down. All told, about 10 wireless resellers have closed shop, leaving about 55, says consultant Alex Besen of the Besen Group.

Vallejo is set to become the largest California city to declare bankruptcy after its city council voted unanimously to file for protection to solve the San Francisco Bay Area suburb’s spiraling budget crisis, the Associated Press reported today. City Manager Joseph Tanner had advised filing for bankruptcy before the city’s fiscal year ends on June 30 because Vallejo faces a projected budget deficit of $16 million and has no money in its reserves. The decision came about when two years of negotiations with the police and firefighter unions failed.

The Jockeys’ Guild filed a plan to emerge from bankruptcy that has it expecting to generate about $213,000 in income a month, the Associated Press reported yesterday. The Guild filed for bankruptcy protection Oct. 12 in Louisville after financial problems from its health insurance plan, litigation and decreased payments from racetrack associations left it with few assets. Under the plan filed yesterday, the Guild said it could pay $780,095 to nonsecured creditors while still meeting all of its financial obligations.

The head of Frontier Airlines Holdings Inc., which is reorganizing under bankruptcy protection, said yesterday that credit card processing companies are taking a close look at the airline industry as the processors don’t want to be on the hook for ticket refunds if airlines stop flying, the Associated Press reported. Frontier CEO Sean Menke said that the processors are concerned because the industry is coping with persistently high fuel prices, a credit market crunch and the slowing economy. Menke said that Frontier was forced into the move because its credit card processing company, First Data Corp., sought to hold up to 100 percent of proceeds from ticket sales in reserve until the passengers’ flights are completed.

California Gov. Arnold Schwarzenegger is supporting a reorganization plan proposed by MRC/Marathon in the Pacific Lumber bankruptcy case, contending that the group’s outline best satisfies the goal of protecting the California timberlands, Bankruptcy Law360 reported yesterday. Pacific Lumber creditors had three separate reorganization plans to consider in the case. In addition to MRC/Marathon, the Bank of New York Trust Company, Pacific Lumber’s indenture trustee, and Pacific Lumber, together with its parent company Maxxam Inc., have also submitted proposals. In a letter of support filed on Friday, Schwarzenegger said that the MRC/Marathon Structured Finance plan had met the five public-interest principles needed to win his backing. “The MRC/Marathon plan best satisfies the first and second principles — compliance with federal and state laws, permits and agreements — because it makes concrete pledges to abide by all environmental laws, existing permits and agreements,” the letter said. A hearing to consider the confirmation plans is set for today.