Deal Brings Settlement Closer In Gulf Usa Corp. Bankruptcy
A deal struck Thursday between several parties in the Gulf USA Corp. bankruptcy case adds momentum toward a June settlement, lawyers said.
The bondholders of the former owner of the Silver Valley’s Bunker Hill Mining complex agreed not to challenge environmental claims made by the U.S. government and the Coeur d’Alene Indian Tribe.
In return, the bondholders will receive $1 million in the reorganization plan. That amount comes from the money to be split between the government and the tribe, said Ford Elsaesser, representing the unsecured creditors Thursday morning at a Gulf hearing here.
The bondholders also will receive higher percentages of fees and potential profits from the settlement. Since resolving the multi-million-dollar bankruptcy requires investors to buy up Gulf assets, the proceeds are difficult to estimate.
Elsaesser figured that his clients, who are among the last creditors to get a slice of the Gulf pie, would get between $2 million to $4 million more through the deal.
That’s an improvement for the bondholders, who previously stood to collect only a total of $3 million on their $80 million in claims.
Lawyers for the government called the deal an important step toward ending the convoluted bankruptcy case. The outcome will determine the future of medical benefits for thousands of Bunker Hill pensioners.
“I think this agreement improves the chances for confirmation (of the proposed settlement) because it removes some of the most difficult issues that the court would face,” said Peter Mounsey, representing the Department of Justice.
The agreement means the tribe and the government won’t face challenges from Elsaesser on their combined $1.4 billion claims against Gulf for environmental damages from Bunker Hill.
The tribe and the government each stand to receive just a fraction of their claims, based on the settlement proposal in front of the court and bankruptcy Judge Alfred C. Hagan.
Hagan heard objections to the latest reorganization proposal from Gulf lawyers. Coeur d’Alene’s Hecla Mining Co. objected to the lack of detail in the proposal about how much money would go to the government and the tribe for environmental claims.
Denver bankruptcy attorney Claire Holmes said that Hecla wants to know which claims are actually being paid and to whom.
While the unsecured creditors group settled differences over the environmental claims, Elsaesser made it clear that the bondholders still have deep reservations about how the Bunker retirees fare in the proposal.
The former Bunker employees stand to make out the best in the bankruptcy, despite their original claim of around $50 million being brokered down to about $42 million. That money would go to pay for medical benefits.
Elsaesser said he’s concerned that the retirees are being favored over his clients. His arguments and others made Thursday will likely be brought up during the settlement’s confirmation process in June.
Seeing that Gulf attorneys planned to amend the reorganization proposal to suit some of the parties’ objections, Hagan ordered that the amended version be sent out to all creditors for approval. The vote is set to be tallied June 12.
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