Jacobs Field Services North America filed with the U.S. Bankruptcy Court an objection to Midway Gold’s Disclosure Statement for First Amended Joint Chapter 11 Plan of Liquidation.
The objection asserts, “The Disclosure Statement is insufficient for several reasons: First, it fails to properly account for the numerous post-petition inter-company transfers made between the Debtors that diminished the value of the collateral securing the liens of the mechanic’s lien holders. Second, the Disclosure Statement does not disclose the fact that the subordination agreements which the Debtors assume relegate Jacobs Field Services North America to the unsecured creditor class is invalid under Nevada law. Third, the Disclosure Statement fails to account for approximately $5.9 million in perfected and fully secured mechanic’s lien obligations owed to Jacobs. Fourth, the Disclosure Statement fails to describe the impact of this $5.9 million secured liability on other creditors, (not just the recovery of the Commonwealth Bank of Australia, CBA). Fifth and finally, the Disclosure Statement fails to adequately or meaningfully support the self-serving valuation of MDW Pan LLP (sometimes referred to as ‘Pan’ or the ‘Pan Project’)….The Debtors fail to accurately or properly address the effect of, or allocate, the numerous intercompany transfers made during the course of this bankruptcy proceeding. Midway Gold US, during the pendency of this action, borrowed over $5,019,000 through intercompany transfers from MDW Pan.”
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