County motion on mine bankruptcy hits snag

Jefferson County’s legal effort to reverse the dismissal of Montana Tunnels Mining Inc.’s long-running bankruptcy case — and to collect the $3.1 million back taxes Montana Tunnels owes — hit a snag last week.

The County filed a motion with the U.S. Bankruptcy Court of Montana on Oct. 22 asking it to overturn the dismissal it had ordered in July. The County hopes the court ultimately will convert Montana Tunnels’ case into a Chapter 7 liquidation, which could lead to a sale of the company’s long-shuttered gold mine outside Jefferson City.

But on Oct. 30, the U.S. Trustee overseeing Tunnels’ bankruptcy filed an objection to the county’s motion. Brett R. Cahoon wrote that the Trustee did not disagree with the County’s assertion that a Chapter 7 liquidation “may be, or may have been, in the best interest of creditors and the estate.” In fact, the Trustee advocated unsuccessfully for that alternative before the case was dismissed.