Montana Tunnels Mining Inc. has taken two steps forward and one step back in its Chapter 11 bankruptcy proceedings after several entities filed oppositions to the company’s plan for reorganization in June.
Tunnels received a one-time extension to its plan for reorganization filing period, moving the submission date to June 5. Tunnels had until Aug. 2 to obtain confirmation of the plan’s feasibility and compliance with bankruptcy codes from the court, but objections from the Department of Environmental Quality, the U.S. Trustees and the Natural Resource Damage Program shifted the deadline.
To reopen the mine, Tunnels plans to secure $100,000 a month in financing from its parent company Montana Goldfield Inc., $250,000 a month from leasing its ore-concentrating facility to nearby Elkhorn Goldfields Inc., additional funding from the potential lease of a gravel pit to a third party, and sale of land.
Although Tunnels said the plan of reorganization will provide payment to all creditors with interest, the DEQ and U.S. Trustees were not convinced that funding was viable.
Gregory Garvin, acting U.S. Trustee for region 18, was first to file objections to Tunnels’ plan, stating that the lease of the ore-concentrating facility to Elkhorn Goldfields Inc could increase reclamation bonding costs with the DEQ.
In addition to the potential bond increases posed by the plan, the DEQ’s attorney Steven Johnson questioned whether Tunnels’ plan showed that the company could definitively secure the funding as claimed.
“[Tunnels] should provide more specific information and substantiation of the likelihood that it will have funding to implement the plan,” Johnson wrote. “The feasibility of the plan remains speculative.”
Garvin’s objection also indicated that the budget was difficult to read and featured inconsistencies in payment amounts. Northwestern Energy, for example, was listed to receive $1,356.45 each month to pay off its $66,115 claim; however, Garvin calculated $1,244.95 as the proper monthly payment.
Additionally, Garvin pointed out that Tunnels’ proposed plan to begin making a series of 60 payments to the Internal Revenue Service and Jefferson County 90 days after the confirmation date doesn’t comply with bankruptcy code, which requires these entities receive payment within five years of the order for relief. This shifts the deadline to pay the claims to Dec. 5, 2027.
The Natural Resource Damage Program also filed an objection, stating that the plan didn’t include the organization’s $27 million claim “for all costs for damages for injury to, destruction of or loss of natural resources.”
Tunnels now has until Aug. 9 to file an amended plan which addresses the concerns raised. Creditors have until Aug. 31 to submit any objections to the revised plan.
Creditors will also meet on Aug. 29 at 9 a.m. in the Mike Mansfield Federal Building and United States Courthouse, located at 400 N. Main Street in Butte, to discuss the revised plan.
