Primcogent Solutions LLC filed for Chapter 11 protection on Monday, claiming that the laser’s manufacturer misled company officials into thinking that roughly 600 lasers were out in the market and generating revenue when the two groups entered into a licensing and distribution deal in late 2011.

Primcogent later found that about 200 of those Zerona lasers, which have made the rounds on daytime television on the Rachael Ray and Dr.Oz shows, were not generating revenue, according to papers filed with the U.S. Bankruptcy Court in Fort Worth, Texas.

Some of the lasers were still being demoed by doctors who melted a patient’s fat cells by pointing thin, red beams at a their waist, hips and thighs. (In euphemized industry-speak, the fat-liquefying procedure is referred to as “body contouring,” and it typically costs $1,500.)

Primcogent officials said in court papers that the Zerona laser users later began returning them sooner than they expected, making it tough for the company to make payments on a $12 million loan and the royalty payments owed to the laser’s manufacturer, Erchonia Corp. PrimCogent was notified in February that it had failed to make payments under the agreement or make required sales quotas, according to court papers.

After Erchonia officials cut off the licensing agreement for nonpayment, Primcogent said that the manufacturer has been contacting its customers “falsely stating that the [company] is going out of business and no longer has any rights to sell the products.” Primcogent officials asked Bankruptcy Judge D. Michael Lynn to use his judicial power to stop that while the company attempts to reorganize.

Erchonia’s attorneys have fired back, arguing that Primcogent shouldn’t be able to use Chapter 11 protection as a shield.

“There is no dispute that Primcogent failed to make the required payments,” the manufacturer’s attorneys said in court papers. “The heart of this dispute is a combination of contract and patent law. There is nothing to this dispute that arises out of the Bankruptcy Code.”

In court papers, Primcogent also said that Erchonia officials have dragged their feet in getting U.S. Food and Drug Administration approval to sell the Lunula toe fungus laser technology, which was included in the 2011 licensing agreement so that Primcogent could avoid being “a one-product company.”

Write to Katy Stech at katy.stech@dowjones.com.

David Adkins, better known as Sinbad, has moved into a different world: the world of bankruptcy. According to TMZ (h/t Huffington Post), the actor and stand-up comic filed for bankruptcy last month for the second time since 2009. Court documents show that Sinbad, who starred in an eponymous TV series, racked up nearly $11 million in debt but only reported $131,000 in assets. Some of those debts include $2.3 million owed to California’s Franchise Tax Board and hundreds of thousands of dollars owed to American Express . But the bulk of his debt—$8.3 million—is owed to the Internal Revenue Service for years of unpaid income taxes.

Girls Gone Wild founder Joe Francis isn’t happy about his recent misdemeanor assault conviction. According to the Hollywood Reporter, Francis thinks the jury that convicted him should get euthanized. “You are the weakest members of the herd,” he said earlier this month. “And if that jury wants to convict me because I didn’t show up, which is the only reason why they did, then, you know, they should all be lined up and shot!” The problem with the jury system, he told the Reporter, is that “anyone who’s not smart enough to come with an excuse to get out of jury duty doesn’t get out….I’ve never met a smart person who’s done jury duty.” Francis later apologized for his remarks about the jury. ”I deeply regret the remarks attributed to me in the interview with the Hollywood Reporter,” Francis said, noting that they weren’t his “true feelings.”

Sinbad isn’t the only one dealing with the IRS in this edition of Broke. As Bankruptcy Beat reported, the IRS is saying a little prayer that it can resolve tax issues with singer Dionne Warwick. This week, it asked the U.S. Bankruptcy Court in Newark, N.J., to lift a stay shielding the IRS from resolving the taxes it’s owed. A judge will rule on the IRS’s request at a hearing next month. According to court documents, Warwick owes the IRS almost $7 million in federal taxes from 1991 through 1999 and 2007.

Amanda Abbington filed for bankruptcy earlier this year, and the “Mr. Selfridge” actress isn’t pleased about her financial woes being in the spotlight. According to the Irish Independent, Abbington said it was mean and upsetting that her insolvency was so public. “The thing that upset me was it’s nobody’s business,” she she told the Radio Times. “But it becomes public because they put it on something called The London Gazette and then people find out. It’s mean.”Abbington, whose longtime partner is “The Hobbit” star Martin Freeman, said she never wanted to avoid paying her taxes and that things just got out of hand.  ”It’s fine, it’s being sorted out,” she said. “It was a big mistake and I’m sorting it out right now.”

Write to Melanie Cohen at melanie.cohen@dowjones.com. Follow her on Twitter at @MelanieLisa.

Joel Ryan/Associated Press

Dionne Warwick in November 2012

The Internal Revenue Service is wishin’ and hopin’ it can resolve Dionne Warwick’s unpaid taxes.

Warwick filed for bankruptcy protection in March, a move that allowed the singer shield herself and her assets from creditors in search of payment. Now, the IRS is asking a New Jersey bankruptcy judge to temporarily to lift that shield so it can start resolving the unpaid taxes it’s owed.

Warwick’s bankruptcy petition says she owes the IRS nearly $7 million in federal taxes for the years 1991 through 1999 and 2007. To help it collect on the debt, the IRS says it turned to two companies tied to Warwick: Star Girl Productions Inc. and KMBA Productions. The IRS says the shield protecting Warwick from creditors doesn’t apply to these companies, and it wants to hang on to the funds the companies have already turned over. The tax agency says that with bankruptcy-court permission, it will use the funds to pay down Warwick’s tax debt.

A New Jersey bankruptcy judge will consider the IRS’s request, which it filed with the court on Thursday, at a June 17 hearing.

The Grammy award-winning singer and former Psychic Friends Network spokeswoman filed for Chapter 7 bankruptcy on March 21 to deal with the tax debt that her bankruptcy attorney blamed on her former manager.

Write to Jacqueline Palank at jacqueline.palank@dowjones.com. Follow her on Twitter at @PalankJ.

(Daily Bankruptcy Review and DBR Small Cap are daily newsletters with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)

The Rue21 clothing chain is selling itself to Apax Partners for $1.1 billion, DealBook reports.

Credit Slips discusses bankruptcy forum shopping.

According to Reuters, the ex-chief executive of Fisker Automotive and Chrysler Group LLC is starting a venture capital fund with Roger Pense.

Officials say that if Detroit files for bankruptcy, the Detroit Institute of Arts’ collection could be sold to repay creditors, the Associated Press reports.

Dewey & LeBoeuf LLP’s bankruptcy lawyer tells Bloomberg that more big law firms will fail.

Write to Melanie Cohen at melanie.cohen@dowjones.com. Follow her on Twitter at @MelanieLisa.

Reuters

With the arrival of Allan Diamond in Dewey & LeBoeuf LLP’s liquidation, former partners and their new law firms should hang onto their hats—and their wallets.

Diamond and his firm, which have filed more than a dozen unfinished business lawsuits in the bankruptcy of Howrey LLP, have now been retained to investigate similar claims in Dewey’s bankruptcy case, court papers show. In such lawsuits, a bankrupt law firm stakes a claim in the profits from work that its former partners took to their new law firms.

A noted litigator who isn’t afraid to take a hard line, Diamond and his team at Texas law firm Diamond McCarthy LLP are now reaching out to Dewey’s former partners in an effort to resolve issues outside the courtroom. Diamond, who couldn’t immediately be reached for comment Thursday, has done the same for Howrey’s former partners and their new firms, only filing lawsuits against those with whom settlement talks didn’t pan out.

Still, the Howrey case has earned Diamond somewhat of a bad cop reputation compared with the lawyer who led Dewey’s bankruptcy case, Al Togut. Togut quickly reached a settlement with many former Dewey partners over money they received while the firm was struggling. Instead of suing them to recover all the funds he could, Togut cut a deal to recover just a portion. The settlement, however, didn’t include unfinished business claims, nor did all partners sign on to the agreement, which is where Diamond and his law firm come in.

Togut alluded to Diamond’s reputation as a tough litigator at a bankruptcy conference outside of Washington, D.C., last month. All lawyers in a firm that goes bust want a clean break, he said, which should make it easy to cut a deal with partners like the Dewey settlement. But what if partners are reluctant to settle?

“Then you say, let me introduce you to Allan Diamond,” Togut said.

Write to Jacqueline Palank at jacqueline.palank@dowjones.com. Follow her on Twitter at @PalankJ.

The 80-year-old entrepreneur, a college dropout who grew ComputerLand throughout the 1970s and 1980s, has been portrayed as a Cayman Islands tax exile who, with his wife Patricia, has managed to dodge a 1987 tax bill that’s climbed past $118 million. In papers filed last week with the U.S. Bankruptcy Court in Manhattan, Millard said he faces more than $62 million in debt, largely owed on taxes, while his net worth has dwindled to $46 million.

Millard paints himself as a victim of political corruption that he discovered in the late 1980s after leaving ComputerLand. He moved to Saipan to protect his wealth using a generous tax incentive that island leaders once promised to U.S. citizens who relocated there. In fact, Millard said in court papers, the outstanding tax bill came as a surprise to him two years ago.

“Had we been aware of the [tax collection] proceedings we would have contested them,” Millard said in court papers, asking the New York court to shield his U.S. assets pending a Cayman Islands bankruptcy proceeding. “Despite our efforts to challenge the default judgments there has not yet been any determination on the merits as to whether they are valid.”

Millard’s story, as told in court papers, contrasts with the picture painted by private investigators who said they’ve spent years chasing his far-flung assets across the globe. When they finally located the Millards at their Cayman Islands home three years ago, one of the investigators told The Wall Street Journal that his network of shell companies, trusts and bank accounts to be one of the most “sophisticated and complicated” he’d ever seen.

But in their own words, the Millards’ story goes like this:

“After we moved to the island we became heavily involved with the local society and invested significant resources towards improving living conditions for its residents; we also invested in property and began construction of a home there. Unfortunately it did not take long for us to become aware of extensive corruption by public servants of the [Commonwealth of the Northern Mariana Islands]. We became vocal opponents to the corruption and we were contacted by the Federal Bureau of Investigation to assist them with its investigation into corruption within the [islands’] government. We cooperated with the FBI and this became public information both in the [commonwealth] and in the United States; as a result of media reports confirming my assistance to the FBI, and willingness to testify before a grand jury, we became subject to significant harassment and threats of violence.”

Island lawmakers later passed the Tax Source Act of 1987, which the Millards’ attorneys stated in court papers was nicknamed the “Millard Bill,” and “specifically targeted the Millards and was intended to prohibit them from receiving the [tax] rebate or any other tax benefits.”

Unaware of the changes, the couple sold their shares of a ComputerLand affiliate for $76.8 million, court papers said. The couple filed their taxes in 1988, each reporting a net long-term capital gain from the stock sale, taking into account what was essentially a 95% rebate of the taxes they would have owed under U.S. law, according to court papers.

Tax authorities who later contacted the Millards’ attorney to say they owed more money on account of the tax changes appeared to resolve the issue, they said in court papers.

But the tax debt remained even after the Millards left Saipan for the Cayman Islands after receiving death threats related to the purported FBI investigation. In 1994, the island got a tax judgment against Millard and his wife for $36 million from the U.S. District Court in the Northern Marianas, though tax officials didn’t try to collect that money right away.

“We were never served with the default judgments nor were we made aware that they had been obtained,” Millard said in bankruptcy-court papers.

They said they found out about the island’s tax collection efforts in 2011 when a bank accidentally revealed to the couple that private investigators were on their trail. The couple has since filed a lawsuit in federal court in Florida to get rid of the judgments.

Earlier this year, a judge in that case blocked the Millards from transferring assets among shell entities or their daughters, and they were told to provide sworn answers to various questions relating to their assets across the world, according to court papers. At a hearing set for May 20, island officials were prepared to ask for a court order “directing turnover of the [their] assets,” according to court papers.

On May 16, the couple sought Chapter 15 protection in the New York bankruptcy court to put the legal proceedings in Florida on hold while a bankruptcy judge determines the best course of action.

The Chapter 15 case is meant to supplement a May 10 request for bankruptcy relief filed in the Cayman Islands, according to court papers.

Write to Katy Stech at katy.stech@dowjones.com.

European Pressphoto Agency

Defunct investment bank Lehman Brothers Holdings Inc. said it has agreed to sell $4.22 billion of its general unsecured claims against its brokerage unit Lehman Brothers Inc. for about $1.88 billion, or 45% of face value. Read the article in Daily Bankruptcy Review.

(Daily Bankruptcy Review and DBR Small Cap are daily newsletters with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)

According to Bloomberg, Ally Financial Inc. will pay $2.1 billion to avoid lawsuits from subsidiary Residential Capital LLC’s unsecured creditors.

There are at least two groups of investors interested in electric-car maker Fisker Automotive Inc., The Wall Street Journal reports.

Ahern Rentals Inc.’s second-lien noteholders are nervous about the possibility of paying duplicate fees to lenders in light of a bankruptcy-exit loan being provided by Jefferies LLC. The DBR article is available via Fox Business.

The trustee for Lehman’s brokerage is seeking $37.5 million in expenses and fees, Bloomberg reports.

Also according to Bloomberg Suntech Power Co. ’s Wuxi unit has $542 million in debt claims.

Unable to find a suitable lead bidder for its assets, Atari Inc. wants to put its videogame business on the auction block in pieces. Read the DBR Small Cap article via WSJ.

Diamond McCarthy has been hired to pursue claims against former partners of the defunct Dewey & LeBoeuf LLP firm, the Am Law Daily reports.

According to Reuters, a judge said defunct bookseller Borders Group Inc. owes nothing to gift-card holders.

Write to Melanie Cohen at melanie.cohen@dowjones.com. Follow her on Twitter at @MelanieLisa.

Revel Atlantic City

Revel is offering its four-legged guests custom dog beds.

Revel is kicking off its summer season with a makeover.

The Atlantic City, N.J., resort and casino’s balance sheet has undergone a transformation, thanks to a quickie bankruptcy that saw the reorganized Revel emerge from Chapter 11 protection Tuesday. And there are more changes on tap too—affecting everything from what you can eat to where you can party at the high-end beachfront property this Memorial Day.

Change is even looming for friends of the four-legged variety. Starting over the holiday weekend, Revel is introducing a pet-friendly policy. Dogs under 30 pounds are welcome to stay at the hotel, as long as their owners have an extra $50 per night to spare. For that price, they’ll be treated to amenities including gourmet treats baked by the hotel’s executive pastry chef and a custom dog bed that’s designed to look like a poker chip.

Dirk Schavemaker, the company’s senior vice president of resort operations, said so far the hotel has eight to 10 pet rooms booked for the weekend. An owner of two miniature dachshunds, Schavemaker has found himself coveting the dog bed.

“I actually wanted to take it home,” he said.

He said that fresh programs, like the dog policy, grew out of customer feedback as well as management’s evaluation of the resort’s first year in business.

Built at a cost of $2.4 billion, Revel opened its doors in April of 2012 and began to falter almost immediately. It was imagined as a new luxury and smoke-free paradigm for Atlantic City but instead found itself beaten up by veteran casinos in the running for scarce discretionary dollars. It turned out that Revel had misread customer demand in the downtrodden New Jersey gambling mecca—consumers wanted inexpensive, fast and simple options, not over-the-top glamour.

“We were trying to be perhaps a little bit too fancy,” Schavemaker said. “Maybe that’s what caused some of the issues…the guests were accustomed to Atlantic City prior to Revel.”

He specifically referenced the resort’s dining options as an example. In an attempt to diversify its offerings, Revel is this weekend opening up two new restaurants. One will be a 24-hour eatery called Relish offering quick, American-style comfort food like chicken pot pie and reuben sandwiches.

“Guests wanted cheaper, faster service,” he said.

Another restaurant, simply called Noodle Bar, will serve just that—Asian-style noodles. More complicated names were nixed in keeping with the resort’s new focus, Schavemaker said.

Still, Revel, which has 14 restaurants in total, isn’t doing away with all the glitz. This weekend it’s introducing a new beach club geared toward the younger set. Modeled on outdoor Las Vegas hotspots like Tao Beach and Wet Republic, the 45,000 square foot space will feature sleek day beds, DJs and multiple bars.

“It’s very modern and hip,” Schavemaker said.

The company is also working to add smoking back into the mix at the resort. State gambling regulators are currently reviewing the company’s request to designate a “smoke-friendly area.”

“We’re working very hard to make sure that we overcome the challenges that obviously are still there,” Schavemaker said, adding that he thinks the company now has “a handle” on many of them.

Write to Rachel Feintzeig at rachel.feintzeig@dowjones.com.

The owner of the high-end Revel casino in Atlantic City, N.J., has emerged from Chapter 11 bankruptcy protection, having cut its debt by about 82%. Read the Daily Bankruptcy Review article here.

(Daily Bankruptcy Review and DBR Small Cap are daily newsletters with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)

A bankruptcy-court judge approved the liquidation plan of the failed lithium-ion battery maker once known as A123 Systems Inc.  that divvies up the proceeds from the sale of the company’s assets to a unit of China’s Wanxiang Group. Read the DBR article via WSJ.

According to Bloomberg, nonprofit psychiatric hospital owner KidsPeace Corp. filed for bankruptcy, blaming government spending cuts.

Lehman Australia’s liquidator won the OK to poll creditors on a proposed claims settlement deal, Bloomberg reports.

The Associated Press reports on a Patrioat Coal Corp. protest that resulted in some arrests.

Harrisburg, Pa.’s mayor got booted in the Democratic primary Tuesday, Reuters reports.

Saab’s former chief executive got arrested for suspected tax offenses, the Financial Times reports.

Credit Slips discusses IRAs and Chapter 7 trustees.

Write to Melanie Cohen at melanie.cohen@dowjones.com. Follow her on Twitter at @MelanieLisa.

AMF Bowling Worldwide Inc. is seeking to exit bankruptcy protection through a merger with Bowlmor, one of the upscale bowling chains with which AMF has struggled to compete. Read the Daily Bankruptcy Review story here.

Majority owner Sprint Nextel Corp. plans to boost its offer for Clearwire Corp. Tuesday, according to people familiar with the matter, just as a shareholder meeting was set convene for what many believe would be a failed vote, writes WSJ’s MoneyBeat

The battery maker formerly called A123 Systems Inc. won court approval of a plan to exit bankruptcy reports Bloomberg.

The bankrupt units of specialty chemicals maker RPM International Inc may have to set aside twice as much money for asbestos-related liabilities as the company estimated, writes Reuters.

Three former Saab executives, including former CEO Jan-Aake Jonsson and Chief Financial Officer Karl-Gustav Lindstroem, were arrested by Swedish prosecutors in an accounting-fraud probe, reports Bloomberg.