1994-03-03_GENERAL DOCUMENTS - C1981017 (2)

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t N Maxine Stewart Page 2 Board' s rejection of the plan. Based solely on the Board' s comments about, and responses to, the liquidation plan in the past few months, I recommended rejection of the plan and filing a specific objection on the ground that the personal liability suit was not properly before the bankrupt- cy court. The Board accepted this and voted to reject the liquidation plan, to file a specific objection about the personal liability suit, and to foreclose on the rockdust plant. On March 1, 1994, I informed Jim Holden of the Board' s action. He stated that he would attempt to eliminate the personal liabil- ity provisions in the liquidation plan. I also told Jim about the Board' s concern that the plan may never get funded. He replied that there was no possibility that a third party will put money up front or guarantee payments under the plan. He stated that if and when the personal liability provisions are excised, then the liquidation plan merely divides up the pie. In light of this new information I have set up a special execu- tive session for March 15, 1994, at 10 a.m. in case you wish to further discuss the plan and/or vote on it again. If the personal liability aspect of the liquidation plan is elim- inated, then the Board may fully pursue that suit along with foreclosure of the rockdust plant. As I stated to you in execu- tive session, the Board' s rejection of the liquidation plan could defeat the plan. This would leave you with the proceeds of the rockdust plant and require reliance on the personal liability suit to acquire adequate funds for maintenance and reclamation. The personal liability suit is risky in several ways, including that it raises an issue never before heard in a Colorado court about the reclamation liability of agents of a corporation. In addition, whether these agents have funds to execute upon if the suit is ultimately successful is also unknown. If the Board does not wish to reconsider its vote to reject the plan and the personal liability provisions are eliminated from it, I can file a specific objection to the plan on the basis that it may never get fully funded. For example, although the plan requires funds to be available for reclamation according to a reclamation schedule, funding of the plan appears to still be contingent on property sales. Moreover, administrative expenses would be paid prior to any funding being given for reclamation. Accordingly, an objection could be filed to confirmation of the