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Stephen W. Seifert <br /> January 13, 1993 <br /> Page 9 <br /> Division would agree to a cap on reclamation expenses based on <br /> the best estimates of Resources and the Division as to the <br /> probable cost of reclamation. <br /> Second, the remaining proceeds would be allocated <br /> between Sanwa and the unsecured creditors, in a manner to be <br /> negotiated between them. Based on prior discussions, it is my <br /> understanding that the parties would prefer to divide the <br /> proceeds on a percentage basis, rather than an asset-by-asset <br /> basis. <br /> If the current piecemeal liquidation is replaced by the <br /> proposed sale to Redstone Development, step one above would be <br /> eliminated. Since the sale to Redstone is to occur on an <br /> expedited basis, the sale itself would need to occur by motion <br /> rather than through a plan. <br /> It will be difficult for unsecured creditors to support <br /> a plan unless unsecured creditors and Sanwa first have agreed to <br /> a division of proceeds. In the absence of such an agreement, <br /> unsecured creditors have no assurance that Sanwa will not simply <br /> let the sale occur and then move for dismissal of the case, with <br /> all proceeds to be turned over to Sanwa as the secured creditor. <br /> In short, if Resources is able to reach agreement with <br /> Redstone Development, it will be necessary for Sanwa and the <br /> Unsecured Creditors' Committee to quickly reach agreement on a <br /> division of sale proceeds. A memorandum of agreement would be <br /> filed prior to the Court action date on the sale motion. The <br /> terms of the memorandum would be incorporated into a Chapter 11 <br /> plan which would be filed shortly thereafter. A similar <br /> procedure was followed in this District in the MiniScribe Chapter <br /> 11 case. <br /> Cash Collateral <br /> The approximate $246, 000 received thus far by Resources <br /> from sales of real property and equipment is cash collateral. At <br /> the November 5 meeting, I mentioned that Resources has a need to <br /> use cash collateral for various purposes, ranging from immediate <br /> environmental needs, to liquidation-related expenses, to the <br /> payment of professional fees incurred in the bankruptcy case. <br /> Andrew Heinz ' letter of December 4 , which I believe all <br /> of you have, indicates that Sanwa would prefer Resources to <br /> request use of cash collateral according to a budget covering a <br />