_GENERAL DOCUMENTS - C1981017 (286)

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. ^ Mr. Robert Hagan -2- March 15' 1994 Office of Surface Mining ��.��..�`^......^��__^��`��`�....`. �� with either bankrupt surety or where parrnittee bankruptcy has rendered the nnc|arnotiVn bond under valued baadopted: * Permit must be Revoked, ° Bond must be administratively forfeited, * Primary bmwe/ mbfigem must film and maintain an active bankruptcy hearing status, ° Alternative judicialmechanisms to collect reclamation monies must be employed. These steps follow closely the requirements of previous C]S&0 directives, with some modification being implemented tn account for the unique bankruptcy scenario. Colorado has completed each of the foregoing mtmpm' and has additionally attempted to secure on-going site maintenance by the parrnittaa pending funding of reclamation plan. A brief history of the permit, bond and State actions tmobtain rgo|ornotimn funding follows. The State of Colorado determined that Pattern of Violations had existed at the Coal Basin Mine. Therefore, the mining permit was revoked in August 1982' and the performance bond was forfeited in September 1993 by the Colorado Mined Land Reclamation Board (Board). In February 1992' Mid-Continent Resources filed for Chapter 11 bankruptcy protection' The Board filed suit in September of 1993 against the individual agents of Mid-Continent Resources, the corporate parnnittae' to compel site reclamation or to provide funds sufficient for the State toaccomplish reclamation through a third-party contractor. Individuals and a corporate affiliate were named ao defendants tothe suit. The property to which the State (and the OSK8 as co-obligee) hold first lien im subject to the bankruptcy provisions as it im titled tm Mid-Continent Resources. As such, its disposition im subject tocourt approval, and will not be made available tothe State or OSK4 until a liquidating plan is confirmed by the court and funded to the requirements of the court. Because the property is subject to court oversight, it is also addressed in a proposed, but not yet confirmed, liquidating plan. It is through the liquidating plan that reclamation is proposed to be funded by Mid-Continent. The State has considered obtaining reclamation funding by petitioning the court for relief from the automatic stay in order tV accomplish foreclosure proceedings. However, there are two problems which prohibit proceeding in this vein. First, opposing omunma| advises that therm are many (about 30) junior lien holders to the roo| property which acts as the reclamation bond. In order to obtain free and clear title to the site prior to a sale, the State would need to address the concerns of these junior lien holders in court. Further' each of these junior lien holders is entitled to m redemption period. The exercise of these redemption periods could unjustifiably delay collection of the proceeds of a sale. This judicial process is likely to be very time consuming, and will further draw down an o|raodY stretched |aQm| budget.