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James Holden <br />July 30, 1993 <br />Page 2 <br />FAIRFIELD AND WOODS, PC. <br />ATTORNEYS AND COUNSELORS AT LAW <br />$1.00 per year rent for that equipment. The equipment will surely <br />depreciate in value over the years of use for reclamation by more <br />than $1.00 per year. Thus, even though the Creditors' Trust will <br />be able to sell the equipment at the end of the reclamation project <br />and keep whatever proceeds can be earned on that sale, the net <br />effect seems to be yet another gratuitous transfer from the <br />creditors to the MLRD. <br />While the MLRD may believe that it should win an argument <br />about the priority of its claim, if the unsecured creditors were to <br />prevail in such a dispute, the MLRD would be entitled only to its <br />pro rata share of the Class 9 share of Net Proceeds in the <br />Creditors' Trust. (If other claims in Class 9 are $15 million, and <br />the MLRD is owed $3 million, and Net Proceeds equal $5 million, the <br />MLRD would only receive $191,167, instead of $1.5 million.) In <br />other words, the discount, if any, being visited on the MLRD is not <br />very high in view of its downside risk. Meanwhile, unsecured <br />creditors are left with only the possibility of receiving 23 cents <br />of every dollar which qualifies as Net Proceeds, which is not <br />likely to yield even a 7.5 cent dividend. The splitting of risks <br />and burdens is not very equitable. <br />With those general concerns stated, let me make some specific <br />comments about language in the documents. First the Plan. <br />Section 1.23 -- should the definition of Net Proceeds also <br />state that the Net is only after payment of real estate taxes <br />secured by liens on the property in the Creditors' Trust. I <br />thought at several points in the Plan and Disclosure Statement that <br />this concept needed expression in order to avoid any implication <br />that creditors would be receiving money before the taxing <br />authorities were paid. <br />Section 2.2 -- "Class 3" after the title of the Class should <br />read "Class 2." <br />Section 2.4 -- Should the definition of the claim in this <br />Class make it clear that the full amount of the claim, whether or <br />not secured by property having a value as high as the claim, is in <br />this Class and that no part of Sanwa's claim will be allowed in any <br />other Class? <br />Section 2.5 -- I am not sure that the definition of the claim <br />is worded broadly enough to cover any and all claims of the MLRB. <br />Right now the language is limited to a claim arising under the <br />Reclamation Plan; how about referring also to any claim arising <br />under any statute, regulation, rule, or doctrine of law or equity <br />