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Magnetation Objections Filed

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Multiple parties – including the Internal Revenue Service; Itasca County; White County, Indiana; the Minnesota Department of Natural Resources and American Bank of the North – filed with the U.S. Bankruptcy Court separate objections to Magnetation’s joint motion for the sale and transfer of certain assets and liabilities.

White County, Indiana, asserts, “White County objects to the relief requested in the Sale Motion because White County’s first priority lien against the Real Property is not accounted for and the proposed cure amounts for the Loan Agreement and Trust Indenture are incorrect….Pursuant to the Sale Motion, the Debtors propose to assume and assign the Loan Agreement and the Trust Indenture. The Debtors proposed cure amounts for the assumption and assignment of these two contracts is $0.00. Assuming the Debtors can even assign these two contracts, these proposed cure amounts are incorrect.”

In addition, “First, the Debtors are not parties to the Trust Indenture. Accordingly, it is difficult to see how they would have a right to assume and assign the Trust Indenture to a third party. Second….Mag Pellet has defaulted under the Loan Agreement and the Trust Indenture. Mag Pellet owes no less than $2,309,367.35 in order to cure the payment default under the Loan Agreement and the Trust Indenture. Pursuant to 11 U.S.C. section 365(b), a Debtor may not assume an executory contract, such as the Loan Agreement, unless, at the time of assumption, the debtor cures or provides adequate assurance of a prompt cure.”

The objection continues, “The Debtors have provided no assurance, adequate or otherwise, that either the Debtors or the proposed third-party buyer will be able to satisfy the outstanding tax liabilities and cure the payment default in an amount no less than $2,309,367.35 under the Loan Agreement and the Trust Indenture.”

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