Laserfiche WebLink
September 220 1992 <br /> Page 5 <br /> continuation of bankruptcy administration. As before, the <br /> sharing of funds with unsecured creditors would be premised on <br /> a waiver of claims against Sanwa or against Resources' corporate <br /> affiliates. <br /> If Sanwa makes an offer along the lines of what I have <br /> described above, the Creditors, Committee needs to decide what it <br /> realistically can hope to get out of this case. <br /> Since the meeting between Sanwa and the Committee in <br /> June, one member of the Committee requested information regarding <br /> Resources, relationship with Sanwa, presumably in the hope that <br /> such information would indicate grounds for an action asserting <br /> lender liability claims or seeking equitable subordination. The <br /> information was provided, and in my opinion the information did <br /> not support such an action. <br /> . Also since the June meeting, the Committee requested <br /> information regarding the relationship between Resources and its <br /> corporate affiliates, presumably hoping to find evidence which <br /> would justify piercing the corporate veil to Mid-Continent <br /> Minerals and Mid--Continent Coal & Coke. The information is <br /> sitting in my office and should be turned over to the Committee <br /> by the time you read this. In my opinion, the evidence does not <br /> support piercing. Moreover, the value of affiliates' assets azd <br /> the existence of a senior lien in favor of Sanwa indicates that <br /> Resources' unsecured creditors could not collect their claims <br /> from corporate affiliates even if the corporate veil somehow <br /> could be pierced. <br /> Assuming that the members of the Committee agree that <br /> piercing, lender liability, and equitable subordination <br /> litigation is unlikely to result in payment of their claims, I <br /> suggest that they negotiate a sharing arrangement with Sanwa <br /> based on the rationale expressed in Resources' recent status <br /> report: <br /> In short, bankruptcy provides Sanwa with the best <br /> vehicle for maximizing the value of the real and <br /> personal property of the Debtor and for avoiding <br /> environmental and other liabilities. However, if Sanwa <br /> wishes to avail itself of these benefits, it must pay <br /> for these benefits by sharing the liquidation proceeds <br /> with other creditor groups. <br /> Unsecured creditors also can argue that Sanwa should share <br /> liquidation proceeds in order to pay for a release of Resources' <br /> corporate affiliates. Whale I personally think there in no <br /> chance that creditors would prevail against corporate affiliates, <br /> 9'd dOSS3f 18 H3QIOH WdTO:EO 26. 22 d3S <br />