Judge Disapproves Minnesota’s Request to Exclude Mineral Leases in Essar Steel’s Bankruptcy

by San Antonio Attorney

A U.S. bankruptcy judge denied the request of Minnesota State to withdraw mineral leases of Essar Steel Minnesota from its bankruptcy estate.

The company was pleased by Judge Brendan Shannon’s ruling.

The Department of Natural Resources of Minnesota had asked the judge to exclude the mineral leases in the company’s assets, in order to allow the state to grant them to other operators.

That appeal was plagued with opposition from several parties.  One of them is Official Committee of Unsecured Creditors that represents the interests of contractors and vendors with claims of unsecured debt.

SPL Advisors, the new handler of Essar’s project, are seeking for an arrangement to assume the project, settle debt and pick up construction again, but are fighting a tough battle.

Essar Steel Minnesota declared $1.1 billion in debts, which is over 500% of its assets, as stated in its bankruptcy filings.

Essar together with its parent company ESML Holdings filed a financial report to Delaware bankruptcy court, disclosing the books on the Iron Range mining venture, and giving a peek at the fiscal pressures bore by contractors, who are owed a lot of money.

The firm’s bankruptcy petition was filed on July 8, culminating a lengthy face-off between the Minnesota officials and the company.  The future of state mineral leases and Nashwauk project is still uncertain.

Local contractors and other businesses have also taken a hit as Essar reportedly have $74 million unpaid obligations, in which a total of $49 million is owed to local companies.

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