GENERAL39384

• Permit No: C1981041
• IBM Index Class Name: General Documents
• Doc Date: 9/20/2001
• Doc Name: POWDERHORN COAL CO BANKRUPTCY
• From: ROBERT D CLARK
• To: MLRB
• Permit Index Doc Type: GENERAL CORRESPONDENCE
• Media Type: D
• Archive: No

Several of the Plans purport to provide for
reclamation in Colorado. However, upon close examination,
at present none of the three Plans gives DMG anything which
ran ha anfnr~arl in hankrllptCy rp~i rt nr anv pthar spurt,
Two of the Plans state that reclamation liabilities survive
bankruptcy,3 but none of the Plans provides any money to pay
for reclamation, and the Powderhorn Coal Company which
remains after confirmation under the Debtors' Fourth
Amended Plan has few assets and no cash flow, and the
assets and cash flow are fully encumbered. None of the
Plans contains a budget for reclamation in Colorado,
attached to and incorporated in the Plan. None of the
Plans promises specific sums of money to pay4 for
reclamation in Colorado. None of the Plans commits to
replacing the Frontier reclamation bond for Powderhorn.s
This situation may change during negotiations between
now and the October 12 confirmation hearing. We have
already received preliminary settlement overtures from one
of the plan proponents which is competing with the Debtors.
More discussions will probably follow the telephonic
hearingb on September 19 at 11:30 a.m. Denver time on
Frontier Insurance Company's Objections to AEP's and
Wexford's Disclosure Statements.' (It is largely because of
that hearing that this report is being made solely in
written form.)
We will keep you informed of further developments.
~ Earlier versions of the Debtors' Plan did not even contain this
provision.
The Debtors bandy about a "five year business plan." But that
business plan is a legal nullity. The business plan is neither
attached to nor incorporated in the Debtors' Fourth Amended Plan.
Therefore, it is not an enforceable part of the Debtors' Fourth Amended
Plan, if that Plan is the Plan which is confirmed.
5 We have filed Objections to all three Plans and Disclosure Statements,
based on these and other deficiencies.
e The Court has conducted the last several hearings by telephone,
because air travel has been severely curtailed in the wake of the
September 11 World Trade Center and Pentagon attacks. The October 12
confirmation hearing will probably be conducted entirely in person.
' Frontier was only recently retained by the New York State Insurance
Commissioner, who has placed Frontier in "rehabilitation." (The
rehabilitation proceedings mean that Frontier's ability to honor its
$2.6 million reclamation bond to DMG is even more questionable than it
was before.) Frontier was, therefore, allowed to file objections to
AEP's and Wer,ford's Disclosure Statements by 8:00 a.m. on September 17
(well after other parties, including DMG and the Debtors, filed
theirs). we filed a Partial Joinder to Frontier's Objections by the
end of the day on September 17.
PH Brd status report Sep[ 19 2