Bankruptcy Judge Randall Newsome approved the sale of Aloha Airlines’ contract services division to Los Angeles-based Pacific Air Cargo, Bankruptcy Law360 reported on Friday. The $2 million deal is set to close May 5, provided there are no objections from Aloha’s creditors. The 1,000-employee contract services division handles baggage, ticket agents and customer service for United Airlines and carriers that operate out of Hawaii’s airports. Pacific Air Cargo operates five cargo flights a week between Honolulu and Los Angeles and opened a 65,000-square-foot facility at Honolulu International Airport last year. An auction for Aloha’s cargo division, its most profitable unit, has been extended into next week.

The Italian government will lend Alitalia SpA 300 million euros ($479 million) to prevent the state-owned carrier from running out of cash before Prime Minister-elect Silvio Berlusconi can find a buyer for the state-controlled airline, Bloomberg News reported yesterday. The announcement came after Air France-KLM Group late Monday withdrew its takeover bid for the state-controlled airline, the only concrete offer presented following more than a yearlong search for a buyer. Berlusconi asked the outgoing government to make a bigger loan than originally planned to give him more time to seek a buyer, Prime Minister Romano Prodi said after a Cabinet meeting in Rome. Alitalia is losing more than 1 million euros a day and had less than 200 million euros in cash and credit available at the end of March. The company’s management said that it needs at least 750 million euros of new investment by the middle of this year to stay in business.

With a faltering economy and a tendency among state and local governments to let the market decide which health care facilities survive, attorneys are expecting to see more hospital reorganizations and collapses in the next few years, Bankruptcy Law360 reported yesterday. Among those that have filed for chapter 11 protection in recent years are Brotman Medical Center Inc. in Los Angeles, South Beach Community Hospital in Miami and New Jersey’s Pascack Valley Hospital and Bayonne Medical Center. New York City’s St. Vincent Catholic Medical Centers emerged from bankruptcy last August, after two years in chapter 11. Other hospitals have instead been forced to close down. Holy Cross Hospital in Fort Lauderdale, Fla., for instance, recently announced that it had purchased the nearby, money-losing North Ridge Medical Center and planned to shut its doors. Many of these hospitals have closed because a drop in demand has left too many empty beds, and state governments have often been reluctant to step up and provide funding, attorneys said.

Nearly a year after U.S. Energy Biogas Corp. (USEB) emerged from bankruptcy protection, Judge Robert Drain closed the chapter 11 case, ruling on Friday that the reorganized debtor had tied up all loose ends, Bankruptcy Law360 reported yesterday. USEB filed for bankruptcy protection on Nov. 30, 2006. During its six months in bankruptcy protection, USEB saw liabilities of more than $200 million knocked down to less than $110 million. While USEB’s business was sound leading up to its bankruptcy filing, its loan with Countryside Power Income Fund impaired the company’s capital structure to the point where chapter 11 protection was the best option, USEB said after filing for bankruptcy. USEB and Countryside came to terms in January, with Countryside receiving a $99 million claim that will go to its Canadian subsidiary.

Bankruptcy Judge Richard Schmidt said that he is likely to grant a creditors’ request to throw out Pacific Lumber Co.’s primary reorganization plan during a hearing that starts April 8, Bloomberg News reported yesterday. Judge Schmidt has scheduled a four-day hearing next week to decide which of five competing reorganization plans he will approve. Creditors have proposed two competing plans that strip the company of its equity. The case is Scotia Pacific Co. LLC, 07-20027, U.S. Bankruptcy Court, Southern District of Texas (Corpus Christi).