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Edmond “Buddy” Miller The Law Office of Edmond “Buddy” Miller 1610 Montclair Avenue, Suite C Reno, NV 89509 Telephone: (775) 828-9898 Facsimile: (775) 828-9893 email@example.com Special Counsel for Firstgold Corp., Debtor-In-Possession UNITED STATES BANKRUPTCY COURT DISTRICT OF NEVADA
In re FIRSTGOLD CORP., Debtor.
Case No. BK-N-10-50215- GWZ Chapter 11 MOTION BY FIRSTGOLD CORP. FOR ORDER AUTHORIZING AND APPROVING: (1) SALE OF REAL AND PERSONAL PROPERTY ASSETS PURSUANT TO 11 U.S.C. § 363 FREE AND CLEAR OF LIENS, CLAIMS, AND INTERESTS; (2) ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES UNDER 11 U.S.C. § 365; AND (3) RELATED RELIEF; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT HEREOF Hearing Date: December 6, 2010 Time: 2:00 p.m. Place: Ctrm. 3
Debtor and debtor-in-possession Firstgold Corp. (the “Debtor”) hereby moves the Court for an order (a) authorizing the Debtor to sell some or all of the Debtor’s tangible and intangible assets used in the Debtor’s business operations (the “Property”) free and clear of liens, interests and encumbrances under 11 U.S.C. § 363(f) to a successful bidder for some or all of the Property in accordance with sale procedures approved by order of the Court (each or together, the “Purchaser”) entered on November 8, 2010, which Property is set forth on
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Exhibit “A” to the concurrently filed Declaration of Eric Klepfer (the “Klepfer Sale Declaration”); (b) approving the form of such Purchase Agreement as may be presented by the Debtor and the Purchaser at or before the hearing on this Motion; (c) authorizing the Debtor to assume and assign executory contracts and unexpired leases as designated by the Purchaser pursuant to 11 U.S.C. § 365 (d) approving the cure amounts for the executory contracts and unexpired leases (each a “Contract”) to be assumed and assigned by the Debtor to the Purchaser set forth on Exhibit “B” to the Klepfer Sale Declaration, and deeming the failure of a counter-party to a particular Contract to object to the proposed cure amount and assumption and assignment to be a waiver of such objection; (e) finding that Purchaser is a good faith buyer under 11 U.S.C. § 363(m); (f) waiving the 14-day stay period provided in Federal Rule of Bankruptcy Procedure 6004(h) and 6006(d); (g) authorizing the Debtor to take such other actions and execute such documents as necessary to consummate the Purchase Agreement; (h) finding that notice of this Motion was proper, and (i) granting such other relief as appropriate in the best interests of the estate. This Motion is based on the annexed Memorandum of Points and Authorities, 11 U.S.C. §§ 105, 363 and 365 and Federal Rules of Bankruptcy Procedure 2002, 6004 and 6006, the concurrently filed Klepfer Sale Declaration and exhibits thereto, the previously filed declarations of Eric Klepfer and Mark Mueller and exhibits thereto, Docket Nos. 185 and 178, respectively, the record in this case, and such other pleadings, judicial notice of which is requested pursuant to Federal Rule of Evidence 201, and all arguments and evidence to be submitted in support of the relief requested herein. Dated this 12th day of November, 2010. /s/ Edmond Buddy Miller Edmond Buddy Miller Special Counsel for Firstgold Corp., Debtor-In-Possession
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MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION By the annexed Motion, debtor in possession Firstgold Corp. (the “Debtor”) seeks an order from (a) authorizing the Debtor to sell some or all of the Debtor’s tangible and intangible assets used in the Debtor’s business operations (the “Property”) free and clear of liens, interests and encumbrances under 11 U.S.C. § 363(f) to a successful bidder for some or all of the Property in accordance with sale procedures approved by order of the Court (each or together, the “Purchaser”) entered on November 8, 2010, which Property is set forth on Exhibit “A” to the concurrently filed Declaration of Eric Klepfer (the “Klepfer Sale Declaration”); (b) approving the form of such Purchase Agreement as may be presented by the Debtor and the Purchaser at or before the hearing on this Motion; (c) authorizing the Debtor to assume and assign executory contracts and unexpired leases as designated by the Purchaser pursuant to 11 U.S.C. § 365; (d) approving the cure amounts for the executory contracts and unexpired leases (each a “Contract”) to be assumed and assigned by the Debtor to the Purchaser set forth on Exhibit “B” to the Klepfer Sale Declaration, and deeming the failure of a counter-party to a particular Contract to object to the proposed cure amount and assumption and assignment to be a waiver of such objection; (e) finding that Purchaser is a good faith buyer under 11 U.S.C. § 363(m); (f) waiving the 14-day stay period provided in Federal Rule of Bankruptcy Procedure 6004(h) and 6006(d); (g) authorizing the Debtor to take such other actions and execute such documents as necessary to consummate the Purchase Agreement; (h) finding that notice of this Motion was proper, and (i) granting such other relief as appropriate in the best interests of the estate. II. STATEMENT OF FACTS. Unless otherwise indicated, the facts set forth in this Section II are based on the Declarations of Eric Klepfer and Mark Mueller, Docket Nos. 185 and 178 respectively, which are incorporated herein, and which were previously filed with the Court in connection with the Debtor’s Motion By Firstgold Corp. For Order Approving Sale Procedures with Respect To The: (1) Sale Of Real And Personal Property Assets Pursuant To 11 U.S.C. § 363 Free And Clear Of Liens, Claims, And Interests; (2) Assumption And Assignment Of Executory Contracts And 3
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Unexpired Leases Under 11 U.S.C. § 365; And (3) Related Relief; Memorandum Of Points And Authorities (the “Sale Procedures Motion”), Docket No. 177. A. 1. Background. On January 27, 2010 (the “Petition Date”), Debtor filed a voluntary petition for
relief with this Court under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). Since the Petition Date, Debtor has operated its business and managed its property as a debtor-in-possession pursuant to Bankruptcy Code Sections 1107 and 1108. 2. Previously, the Debtor conducted gold and silver mining operations. The Debtor
maintains a business office in Lovelock, Nevada. The Debtor’s mining operations were principally conducted at the Relief Canyon Mine. The Debtor’s mining operations are currently shut down and Relief Canyon Mine is in care and maintenance status. 3. Pursuant to that certain “Note and Warrant Purchase Agreement” between the
Platinum Long Term Growth LLC and Lakewood Group, LLC (the “Lenders”) and the Debtor dated August 7, 2008 and documents related thereto (the “Loan Documents”),1 Lenders were owed as of the Petition Date no less that $15,510,496 and $3,847,466.17, respectively in principal, interest, charges and fees, and in the aggregate $19,357,961.72 (the “Loan Indebtedness”). Interest, fees and costs continue to accrue on the Loan Indebtedness in accordance with the Loan Documents. The Loan Indebtedness does not include as yet certain unliquidated, accrued and unpaid fees, charges, interest or penalties, some of which continue to accrue. 4. As security for the payment of all amounts due under the Loan Documents, the
Debtor granted to the Lenders, inter alia, a security interest in all tangible real and personal property assets and intangible assets of the Debtor (the “Lender Collateral”), subject only to prior
Certain of the Loan Documents are annexed as Exhibits “G” through “J” to the Declaration Of Mark Mueller In Support Of Motion By Platinum Long Term Growth LLC And The Lakewood Group, LLC To Convert Case To Chapter 7, Or Alternatively, For Relief From The Automatic Stay, docket number __ on the Court’s docket in this case.
and (z) the Lenders’ liens are duly perfected and is in all respects valid and enforceable first priority security interests and liens. 2010 in the above-entitled Court (the “Stay Hearing”). the Lenders filed the Motion By Platinum Long Term Growth LLC And The Lakewood Group. and to take such actions as are necessary to conduct a sale or other disposition of the Operating Assets. fees and charges under 11 U. 2010 as Docket No. 5. Eric Klepfer was appointed as “Operations Manager” of the Debtor vested with. § 502. The Operations Manager has determined that there is no ability for the Debtor to recommence mining operations due to the inability to obtain debt or equity financing in light of the Loan Indebtedness and other debt burdening the Debtor’s assets. in the exercise of his business judgment on behalf of the Debtor and this bankruptcy estate. among other things. the Relief from Stay Stipulation was a binding determination of (x) of the amount of the Loan Indebtedness as stated above. if any (the “Pre-Existing Liens”). Or Alternatively. subject only to the Pre-Existing liens. sole management authority over the Debtor’s operations and the authority to bind the Debtor with respect to a sale of the Operating Assets. has determined that it is in the best interests of the estate to sell some or all of the Property. The Stay Motion was resolved by way of that certain First Amended Stipulation and Order Regarding Termination of the Automatic Stay. as a matter of applicable non-bankruptcy law (the “Lenders’ Lien”). under the terms of the Relief From Stay Stipulation. 8. Mr. (y) that the Lenders’ claims were allowed secured claims in the amount of the Loan Indebtedness plus such other post-petition interest.C.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 5 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 valid and perfected liens existing as of August 7. For Relief From The Automatic Stay and supporting declarations (the “Relief From Stay Motion”). the Operations Manager. the Lenders sought relief from the automatic stay under 11 U. § 362(d). entered by this Court on June 22.S. LLC To Convert Case To Chapter 7. 156 (the “Relief from Stay Stipulation”). 2008.S. The hearing on the Relief From Stay Motion was held on April 20. 7. On March 25. 5 . and not subject to any claim or challenge under Bankruptcy Code Sections 506(a). According to its terms. 6. Further. Among other things. Therefore.C. 506(c) and 552(b). 2010.
com. the Lenders established a website at www. 2010 (the “Sales Procedures Order”). 10. The Lenders also marketed the Property for a number of months by advertising on a website devoted to mining businesses conducted by InfoMine Inc. The Debtor will make the relevant documents reasonably available to those that wish to conduct due diligence. 14. the Sales Procedures Order setting forth all information pertaining to the procedure that potential bidders must follow to bid on the Property has been served and distributed as required by that Order and has also been posted on the aforementioned www. The Lenders have made significant efforts to market and facilitate the sale of the Property for several months. /// 6 . the Lenders have been in contact with in excess of 60 different individuals and entities with respect to the sale of the Property. 2010. 12. as Exhibit “A”.InfoMine. the Lenders have decided to not attach the list of these parties to this declaration. docket number 225. The Court entered an order approving the Sale Procedures Motion by its order entered November 8.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 6 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9. Marketing of the Assets. In addition.reliefcanyon.reliefcanyon. Out of respect for the privacy of these parties (although confidentiality has not been formally requested). since in or about February 2010. at www. Also. The Lenders are highly motivated to maximize the purchase price of the Property. The Lenders have maintained a list of these parties. Excerpts from this website are annexed to the previously filed Declaration of Mark Mueller. B. the primary aspect of which is the Relief Canyon Mine. 13. Since in or about February 2010. 15. specifically relating to the sale of the Property. docket number 178 in this case filed October 13. the Lenders are informed that in excess of 70 different individuals and entities have visited the Debtor’s offices to conduct a due diligence review of the Debtor’s documents and business records with respect to the potential purchase of the Property. 11.com website. In addition.com. and can provide such upon request of the Court.
2010. As part of the proposed transaction. § 363(m). The term “good faith” is not defined in the Bankruptcy Code. 21. D. and for the purposes of.S. N. the Debtor anticipates that it will be assuming and assigning to the Purchaser certain executory contracts and unexpired leases under 11 U. 30. 2d 276. The Debtor proposes to sell the Property free and clear of liens and interests to the maximum extent under 11 U. 20. 1992).C. or an attempt to take grossly unfair advantage of other bidders). F. 958 F. §§ 363(m) and 363(n). the Debtor requests authority to assume and assign 7 . with allowed amounts of the liens to attach to proceeds from the sale. The Debtor and/or the Purchaser(s) of the Property shall present such evidence as necessary and appropriate at the Sale Hearing to establish that the Purchaser is seeking to purchase the Property in good faith within the meaning of.. At this point. 281 (9th Cir.. Ltd. but will be determined at the auction sale to be conducted by this Court on December 6.C.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 7 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C. In re Pine Coast Enters. Ill. § 365. Diebert (In re Ewell). id. 11 U.D. (lack of good faith generally shown by fraud.. collusion between purchaser and other bidders or the trustee. For purposes of 11 U.S. Proposed Treatment of Liens and Interests Against the Property. a good faith purchaser is one who buys the property of the estate in good faith and for value. 16.R. Liens Against the Property. Buyer is Purchase in Good Faith. 1992)(“The requirement that a purchaser act in good faith speaks to the integrity of its conduct in the course of the sale proceeding. E. 147 B. the identity of ultimate buyer of the Property is not known. § 363(f). but courts have provided some guidance. 18. See e. 33 (Bankr. 17. In connection with the proposed sale.C.C. Proposed Assumption and Assignment of Certain Executory Contracts and Unexpired Leases. Ewell v.g.S.”) 19. The liens and interests against the Property are set forth in Exhibit “C” to the Declaration of Eric Klepfer.S.
. .e. E. 136 B. 246. other than in the ordinary course of business. 1991). . property of the estate . sell .D. 1983). In re Mama’s Original Foods. i.2d 1063.. Claims. § 363(b). 22. 841-42 (Bankr. 156 B.S. 1071 (2d Cir.. based on the evidence presented. the property has been given adequate marketing. there is an absence of any lucrative deals with insiders. As described in detail below. 1999).e. the court must further find it is in the best interest of the estate. 234 .C. 249 (Bankr.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 8 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 those executory contracts and unexpired leases designated by the Purchaser pursuant to the terms of the Purchase Agreement. and adequate notice has been provided to creditors. Pursuant to Sections 363(b)(1) and 1107(a). Inc.” 11 U. . 500. Interests And Encumbrances Pursuant To 11 U. the Court should consider whether: (1) (2) (3) (4) the sale is fair and reasonable. 1.S. Cal. “after notice and a hearing. In addition. 23 24 25 26 27 28 B. Debtor Should be Authorized to Sell the Property under 11 U. .S.C.R.R. 1993). . the sale is in good faith. A schedule of all contracts or leases relating to the Property known to the Operations Manager and which the Debtor believes are executory contracts or unexpired leases under 11 U. DISCUSSION Debtor Should Be Authorized To Sell The Property Free And Clear Of Liens. 722 F.S.C. As a general matter.. .. a Court determining a Section 363(b) motion to sell property of the estate should determine. § 365 is annexed to the Declaration of Eric Klepfer as Exhibit “B” (the “Contracts”). C. § 363(b)(1).D. a debtor in possession.R. 830. that there is a “good business reason” to grant such motion. Mo. III. Inc.D. the Debtor’s proposed sale of the Property.C. Cal. subject to overbid.. § 363 And The Terms Of The Purchase Agreement. 502-505 (C. i. A. the price to be paid is adequate. may . is appropriate and should be approved by the Court. In re The Landing. In re Lionel Corp. To make this determination. 8 In re Wilde Horse Enterprises.
Sunwest Bank (In re Walter).R. 753 F. 83 B. 61 B. 136 B. 705 (Bankr. Id. Comer Properties.R.. In Walter v. there is no real choice of the Debtor in this bankruptcy case other than conducting a sale of the Property or risk foreclosure on the Property. 14. Mont. the Property will be subjected to a fair and reasonable bidding process so that those parties have expressed bona fide interest in the Property will have the opportunity to participate in a sale 9 . See Big Shanty Land Corp. 84 B. The trustee (or debtor in possession) is given substantial discretion in this regard. v. Inc. BAP 1988). 1985). the Property has been marketed for several months prior to the filing of this Motion. 19 (9th Cir. In addition. In re Alpha Industries. there is no realistic possibility that the Debtor can obtain financing to make progress toward a successful reorganization.R.R. In order for a sale to be approved under Section 363(b). 1985). As stated above. In any sale of estate assets.2d 547 (7th Cir. 55 B. docket number 178.. The facts pertaining to the proposed sale of the Property amply substantiate the Debtor’s business decision that proceeding with such sale is in the best interest of this estate and merits the approval of this Court. In addition. S. 520 (Bankr.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 9 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a. at 841 (citing In re Chung King. In re Canyon Partnership. Cal. the Debtor’s mine assets are in a care and maintenance program and there are no ongoing mining operations. Sound Business Purpose. due to the Relief From Stay Stipulation granting the Lenders the ability to foreclose on the Property and the liens securing Loan Indebtedness and other liens. courts have broad discretion with respect to matters under section 363(b). Wilde Horse Enterprises. the purchase price must be fair and reasonable.D.R. the ultimate purpose is to obtain the highest price for the property sold. Inc.D. As set forth above in the previously filed Mueller Declaration... 272. N. the Ninth Circuit Bankruptcy Appellate Panel adopted a flexible case-by-case test to determine whether the business purpose for a proposed sale justifies disposition of property of the estate under Section 363(b). Ga. Inc. Therefore. See generally. Inc. 1988). 703. b. Fair and Reasonable Price. In addition. 278 (Bankr. 1985)).
788 F. Id. and.. 6004. the good faith requirement “focuses principally on the element of special treatment of the debtor’s insiders in the sale transaction. Accurate and Reasonable Notice. and local taxing authorities.R. Such a procedure ensures that Section 363(b)(1) will not be employed to circumvent the creditor protections of Chapter 11. and 6006. When a bankruptcy court authorizes a sale of assets pursuant to Section 363(b)(1). parties on the Notice of Electronic Filing List. the Debtor (1) served the Sale Motion on the Office of the United States Trustee.D.2d 143. Therefore. and all federal. return receipt requested and other parties to the Contracts. Inc. as applicable. The Debtor believes that the foregoing notice procedure satisfies the requirements of Fed. 15. (2) served the Sale Motion on parties asserting liens. (i) and (k). (c)(1).Bankr. and 6006. With respect to the debtor’s conduct in conjunction with the sale. 77 B. and on all other creditors and parties in interest in the Debtor’s bankruptcy case by regular mail. and applicable local bankruptcy rules. at 842. (i) and (k). 136 B.R.P 2002(a)(2). 1986). and further speaks to the integrity of the transaction. Good Faith. Inc. With respect to the buyer’s conduct. c. it is required to make a finding with respect to the “good faith” of the purchaser. “Good faith” encompasses fair value. applicable local bankruptcy rules..R. Pa. In re Abbotts Dairies of Pennsylvania.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 10 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 process designed to attract a buyer with the financial wherewithal to consummate a purchase of the Property. this 10 . and parties requesting special notice by regular mail or Notice of Electronic Filing. it mirrors the requirement of Section 1129 that the Bankruptcy Court independently scrutinizes the proposed sale and makes a finding that it has been proposed in good faith. 6004. the Debtor submits that a fair and reasonable price will be obtained. as such. Pursuant to Fed. (c)(1). and place of the Sale Motion summarizing the proposed terms of the sale and the assumption and assignment of the Contracts (the “Sale Notice”) on all of the foregoing parties pursuant to the methods discusses above. d. encumbrances. 17 (Bankr.R. or other interests against the Property. state. at 150.” See In re Industrial Valley Refrigeration and Air Conditioning Supplies. time. E. and demonstrates that there was adequate and reasonable notice of the Sale Motion.P 2002(a)(2).Bankr. 149 (3rd Cir. and (3) served its notice of the date. 1987). Wilde Horse.
1988). .. Interests.. 1983)).. “[l]ack of good faith is generally determined by fraudulent conduct during the sale proceedings. The Debtor Should Be Authorized to Sell the Property Free and Clear of Liens. in a legal or equitable proceeding.R. Based on all of the foregoing. 847. see Wilde Horse. at 842. 706 (Bankr. conducted in good faith. 715 F. Accordingly. In short. 572 F. 1978).2d at 147.2d 1401. 136 B. 2.D. The Debtor submits that the proposed sale of the Property has been. in relevant part. Inc..” Abbotts Dairies. Mach. to accept a money satisfaction of such interest. . the Debtor submits that the successful bidder for the Property will be entitled to a good faith finding pursuant to Section 363(m). In re Alpha Industries. the Property has been marketed and will be continued to be marketed is the best interests of maximizing the value to the Debtor’s estate. Further. Corp.R.Mo.2d 1195. or an attempt to take grossly unfair advantage of other bidders. 84 B. In re Rock Indus. (4) such interest is in bona fide dispute.R. E. 703. as follows: The [debtor in possession] may sell property under subsection (b) . 1988) (citing In re Exennium. 11 . 788 F.” In re Apex Oil Co. collusion between the purchaser and other bidders or the [debtor]. 1404-05 (9th Cir. the Debtor does not contemplate that the Property will be sold to an insider as that term is defined by Section 101(31)(B). or (5) such entity could be compelled. (2) such entity consents. the Debtor submits that all of the requirements for a sale under Section 363(b) have been satisfied. (3) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property. D. and will be. only if— (1) applicable non-bankruptcy law permits the sale of such property free and clear of such interest. Inc. of this section free and clear of any interest in such property of an entity other than the estate. Mont. 92 B. 1198 (7th Cir. and Encumbrances. 869 (Bankr. As set forth herein and in the Debtor’s Sale Procedures Motion. Section 363(f) provides. Claims.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 11 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Court should consider whether there is any evidence of “fraud.
D.2 The concept of adequate protection pervades the sale provisions of Section 363(f). In re Beker Industries Corp. of Texas v. As stated by one court: The Property can be sold free and clear if any interest of pursuant to Section 28 United Savings Assoc.R. and not the face amount of the secured debt. 363(f)(4). Matter of Rouse.Ed..C.D.Y. 180 B. In re Hatfield Homes. 484 U. 363(f)(3).D. 54 B. Inc. In re Terrace Gardens Park Partnership. the Debtor needs to satisfy only one of the five subsections of Section 363(f) in order for the auction sale to be free and clear of all interests.R. Pa.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 12 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 2 11 U. and 363(f)(5) is satisfied with respect to creditors asserting an alleged lien. or encumbrance against any of the Property. In this case. 31 (Bankr. 353 (Bankr. 474 (Bankr.relating to adequate protection as in Section 506(a). 30 B. 363(f)(3). 1992). In re Collins. Section 363(f) was drafted in the disjunctive. which deals with the valuation of secured interests. W. 108 S. Pa. These Courts have held that a valuation of liens conducted under Section 506(a) may be used to determine the “aggregate value of all liens” under 11 U. 96 B. 150 B.D. 1983). Sec. M.R. 630. S. Therefore. E.S. interest.S. In re Milford Group. 63 B. 904..N. 906 (Bankr.. First.Mo. claim.C. Sections 363(f)(3).Ct. 3. a sale should be approved where the proposed sales price exceeds the actual value of the liens as measured under Section 506(a). A line of cases establishes that the meaning of “value” under Section 363(f)(3) has the same meaning as in Section 506(a). 1986). In other words.R. All of these cases held that the measure of the value of liens under Section 363(f)(3) must be measured in the context of Section 506(a). 626.W.2d 740 (1988).. 365.S.D. 1989). §363(f). the term “value” has been interpreted by the United States Supreme Court to have the same meaning in Bankruptcy Code Sections 361(1) and (2) .R. 447 (Bankr.D. Timbers of Inwood Forest Assocs.R. Tex.1985). 707 (Bankr. 12 . Va. 1995). E. Inc. 98 L.
Adequate protection in turn focuses on the value of the collateral securing the claim.R. 96 B.C. value is determined in light of the valuation's purpose. .” In re Terrace Gardens Park Partnership..S. . 63 B. especially as the commonly accepted method of adequately protecting a secured creditor when a sale is authorized under Section 363(f) is to order the liens to attached to the proceeds of the sale. including the debtor at the expense of its own cash flow and of its general creditors. § 363(e).” Beker. at 713 (footnotes omitted). Such value shall be determined 13 . All four sections employ the common concept of adequate protection as the touchstone for whether a Debtor’s proposed action should be approved. Second. and the proposed disposition of the property. a secured creditor who disagrees with the proposed sale has recourse to Section 363(k). continue to fund the property without a firm prospect for return. is a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property. the debtor is permitted to sell property of the estate. 11 U. just because the sale is free of liens. So long as a creditor’s interest is adequately protected. § 506(a) states in pertinent part: "An allowed claim of a creditor secured by a lien on property in which the estate has an interest .R.364 all address the treatment of secured claims in a bankruptcy context. Id. at 478. When determining the value of a lien under § 506(a).. it is effectively insisting that others. which permits such creditor to bid in its lien to block a sale. Permitting a sale where the secured creditors are adequately protected avoids the unfair situation where a creditor refuses to consent to a sale which is otherwise beneficial to the estate. As stated in the Beker decision: “[I]f a secured creditor does not desire to take the property for itself and yet refuses to consent to a sale at less than the amount of its lien.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 13 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “Sections 361 . It makes no sense to read into Section 363(f)(3) a restriction inconsistent with the adequate protection scheme which pervades both Section 363 and the rest of the Code. .
BAP 1993). the Debtors respectfully request that the Court approve the Sale pursuant to 11 U. Dobbins. a. 870 (4th Cir. ."4 In this case. see also. 151 B. 935 (9th Cir. pursuant to 11 U. Collier on Bankruptcy.3d 860.C. provided that the terms of the sale are fair and were arrived at on an arm's-length basis. Rash. 960.S. . King.03[b] at 506-40. § 363(f)(3). v. 4. § 363(f)(4).Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 14 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 3 in light of the purpose of the valuation and of the proposed disposition or use of such property. . 1879. 1883 (1997) (amount of secured claim under § 506(a) "is the price a willing buyer in the Debtors’ trade. Associates Commercial Corp.S.C."3 As stated by Collier on Bankruptcy: "If an actual sale (or equivalent disposition) is to occur. 117 S. 14 . 35 F. For these reasons. 520 U.R. the value of the collateral should be based on the consideration to be received by the estate in connection with the sale.C. Ford Motor Credit v. The Unpatented Mining Claims in Which Royal Gold Asserts A Royalty or Other Interest Have Been Extinguished. 931. purchase price obtained by way of the competitive sales process conclusively determines the value of the Property for purposes of 11 U. Because the purchase price to be obtained equals or exceeds the aggregate value of the liens in the Property after application of the principles states above. The Property has been marketed and has already been subjected to competitive market forces as described above. 1994)(actual sales price determinative of value under § 506). 138 L. 25 26 27 28 In re Alpine Group. In addition. business.Ed.S. The unpatented mining claims of the Debtor can be sold free and clear of the purported interests of Royal Gold. the approved sale procedures provide further assurances of fair value being received by the estate. 4 4 L.Ct.2d 148. Where there is an actual sale. such "is conclusive evidence of the property's value. the Debtors are seeking approval of a bona fide sale pursuant to sale procedures that are fair and designed to attract a bid that is equal to the fair value of the Property. ¶ 506. Inc.S. or situation would pay to obtain like property from a willing seller"). 953. § 506(a).
the Original Claims no longer exist. Annexed to the RGI Proof of Claim are a number of Schedules (Schedules A-1 and A-2) (the “Original Claim Schedules”). Exhibit “A” to the RGI Proof of Claim alleges that RGI claims a mineral royalty interest in certain unpatented mining claims purportedly owned by the Debtor as set forth in two agreements: (1) Net Smelter Return Royalty. The Debtor disputes that RGI has an ongoing royalty interest in the unpatented mining claims that are being sold pursuant to this Motion described in Exhibit “A” hereto (the “Claims For Sale”). and that such is a “bona fide” dispute pursuant to 11 U. 1996 between Newgold. of which this Court is requested to take judicial notice as claim number 75-1. the “Royalty Agreements”). (“RGI”) filed a proof of claim in this bankruptcy case on March 5. and (2) Net Smelter Return Royalty Agreement.) Newgold. Inc. The Original Claims were extinguished when the Original Claims were deemed forfeited as a matter of law several years prior to the Petition Date. the Debtor has concluded that Newgold failed to pay the annual maintenance fees associated with the Original Claims. RGI alleges that it has an unliquidated claim in an unknown amount purportedly secured by a lien in real estate owned by the Debtor. dated June 13.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 15 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 5 Royal Gold.S. in 2006.. (“Newgold”) changed its name to Firstgold Corp.C. Inc. Inc. The Original Claim Schedules set forth the mining claims that at one time related to the Relief Canyon Mine. and Repadre International Corporation (the “1997 Royalty Agreement”. dated October 3. Of overriding importance.5 On the first page of the RGI Proof of Claim. and together with the 1996 Royalty Agreement. Inc. 15 . 1997 between Newgold. the Debtor herein. and Repadre International Corporation (the “1996 Royalty Agreement”). 2010 (the “RGI Proof of Claim”). (The Debtor reserves the right to dispute that RGI is the successor entity to Repadre International Corporation. Based on an extensive review of the Debtor’s documents and the records so far reviewed from the Bureau of Land Management (the “BLM”). § 363(f)(4). resulting in their 28 The RGI Proof of Claim is annexed to the Klepfer Sale Declaration as Exhibit “D”. as individually identified by their unique “Bureau of Land Management Nevada Mining Claim” serial number (“BLM NMC”).
§ 28i. whether located before or after October 21. Newgold staked new unpatented mining claims. See list of current BLM NMC serial numbers at Section 1.” 11 U.1. mill. 16 . mill or tunnel site by the claimant and the claim shall be deemed null and void by operation of law. entitled “Mineral Claims (Mining Lode and Mill Site Claims) – 6 30 U. which show that all of the Original Claims with the original BLM NMC serial numbers are closed and inactive. Failure to pay Failure to pay the claim maintenance fee or the location fee as required by sections 28f to 28l of this title shall conclusively constitute a forfeiture of the unpatented mining claim. section 28f provides for the payment of claim maintenance fees for each assessment year: “(a) Claim maintenance fee “***** “The holder of each unpatented mining claim.C. shall pay to the Secretary of the Interior. or tunnel site. The Original Claims are all indicated with an “NSR” on Exhibit “G”.6 Subsequent to the forfeiture of the Original Claims. 1998. except that for the initial assessment year in which the location is made. Exhibit “H” shows all Claims for Sale (marked as “CFS”) with current BLM NMC serial numbers as being active. This forfeiture and extinguishment of the Old Claims as a matter of law is demonstrated by the chart and other documents obtained from the BLM website annexed to the Klepfer Sale Declaration as Exhibits “G” and “H”. [Emphasis added]. Federal mining statutes that became effective in 1995 specify that the “failure to pay” the maintenance fee by the deadline “conclusively constitute[ed] a forfeiture” of the claim. located pursuant to the mining laws of the United States. on or before September 1 of each ** year * * * a claim maintenance fee of $100 per claim or site. 28i. the locator shall pay the claim maintenance fee at the time the location notice is recorded with the [BLM].S.C. * * * “(b) Time of payment “***** “The claim maintenance fee payable pursuant to subsection (a) of this section for any assessment year shall be paid before the commencement of the assessment year.S.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 16 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 forfeiture as a matter of law. generating each time new BLM NMC serial numbers.S. §§ 28f. 30 U.C.
. Locke.C. Newgold held an exclusive possessory interest in the Original Claims. however.shall be free and open to exploration. § 26 further provides that “[t]he locators of all mining locations.so long as they comply with the laws of the United States. most of which occurred in 2004. lodes and ledges through the entire depth. Such a location constitutes a discovery and gives the claimant a right of exclusive possession against other claimants for mining purposes..7 The claimant may continue to possess an unpatented claim. v. 813-15 (10th Cir.. 84 (1985).. Independence Min. 506 (9th Cir. extract and sell minerals without payment of any royalty to the United States.. after application to the United States Secretary of the Interior. when it examined the nature of a mining claimant’s interest in unpatented mining claims.8 The United States Supreme Court explained this in United States v. Babbitt.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 17 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Real Property. In contrast to the unpatented Original Claims. Manning v.S. Based on the BLM information. which is Exhibit “A” to the Klepfer Declaration in support of this Motion. 146 F. The legal effect of the forfeiture of the Original Claims can be best understood by reviewing the nature of Newgold’s interest in the Original Claims.” 8 7 30 U.C..3d 502. As demonstrated by Exhibit “G”.. 105 F. 30 U. 17 . the holder of a claim who.. the Debtor never patented its mining claims nor acquired a fee interest in the land underlying the Original Claims. § 22 provides: “all valuable mineral deposits in lands belonging to the United States.S. Co.S... Under The 1872 Mining Law.3d 808.shall have exclusive right of possession and enjoyment of all the surface included within the lines of their locations.S. a few other Original Claims were forfeited in 1998. See 30 U.” Owners of unpatented mining claims are subject to the United States' regulatory powers. unreserved public lands to prospect. codified at 30 U.C.under such regulations prescribed by law. explore and develop locatable minerals.” in the Debtor’s “List of Assets for Sale”. 471 U.1998). Here.and the lands in which they are found to occupation and purchase.S. §28.. Newgold’s possessory interest in the unpatented mining claims was at all times defeasible by operation of federal law. United States citizens may go on unappropriated.C. presumably for the same reason. § 22 et seq.. the Original Claims were forfeited for failure to pay the annual maintenance fees.. In Locke. and of all veins. United States. obtains a patent for a mining claim acquires fee title in the underlying real property. Lacking a fee interest in the federal public lands.1997).
and for extinguishment of abandoned claims. 94th Cong. the BLM promptly extinguished their mining claims. and years later be told that his claim is deemed abandoned. plaintiff has no right to any notice from the BLM stating that there has been a violation of the filing requirement.94-1724. reprinted in (1976) U. Courts in the Ninth Circuit have strictly followed Locke’s holding that violation of BLM filing requirements are strictly enforced by the courts. or various other problems .Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 18 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 mining claims were extinguished for failing to timely file required notices under the Federal Land Policy Management Act (“FLPMA”). In Red Top Mercury Mines. 628 (9th Cir.S. 62.Code Cong. 99.News 6175. the Ninth Circuit stated: Thus. at 104. 1989). 2nd Sess.could be in violation of the filing requirement.C. 471 U.C. The Court cautioned that “no right arises from an invalid claim of any kind.2d 618. 43 U. and the Court upheld the FLPMA’s constitutionality. failure to comply with the statutory requirements resulted in a forfeiture of the claims. United States.R. v. 887 F. Notably. Watt.2d 198 (9th Cir. Consequently. the claimants missed this deadline by one day and filed their notice of intention to hold the claim on December 31. See 43 U. §1744(c) (failure to file as required by subsections (a) and (b) shall be deemed conclusively to constitute an abandonment of the mining claim or mill site). 643 F. a filing lost in the mail.due to misfiling.S. at 105. The FLPMA requires claimants who file every year with state and BLM officials a notice of intention to hold the claim along with an affidavit of assessment work on December 30 of each year.S.S..” 471 U.” H. 1981)(citing legislative history). While the deemed abandonment may seem harsh.S. See Western Mining Counsel v.Rep. a miner could do everything right but . Therefore. The BLM’s abandonment was upheld in the Locke decision. because the undisputed intent of Congress was to make “void” those claims for which proper filings were not timely made. A logical outcome is that a 18 . In Locke.No. the legislative history indicates that a claim which is “deemed abandoned” by the BLM is “extinguished. Inc. The Supreme Court recognized that an unpatented mining claim is a “possessory” interest only and therefore a "unique form of property. 6233. In effect. § 1744(a).” 471 U.S. & Ad. at 98.
. An argument that RGI retains a continuing royalty or other interests in the Claims For Sale is contrary to the forfeiture statutes and federal policy encouraging exploration and development of mineral resources as explained in Locke. Once the Original Claims ceased to exist. held that a previously recorded unpatented claim was extinguished for failure to follow the recordation provisions of the Federal Land Policy and Management Act of 1976 (43 U. RGI’s claim to a royalty interest in the unpatented claims directly conflicts with the foregoing binding case law and statutory authority extinguishing stale claims so that subsequent claimants may enjoy a right of unfettered exclusive possession of the mining claims. § 1701 et seq.Rptr.” (30 U. and the lands in which they are found to occupation and purchase.. all mineral land owned by 19 .) By this provision Congress has declared that. the unpatented mining claims were extinguished. In Crummett v. Locke’s progeny show that the Supreme Court’s ruling leave little doubt that unpatented mining claims are lost and not enforceable against subsequent parties who stake claims in the same mining area if the proper filings are not made with the BLM.C. the California Court of Appeals. Id. 62 Cal.. 53 Cal. shall be free and open to exploration and purchase.App.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 19 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 miner may very well have put additional money into his claim during the intervening years without knowing his claim is abandoned. following Locke. § 22. While this strikes the court as unfair. Miller. The Crummett court held that a subsequent party that staked certain unpatented claims held title free and clear of the interest of the prior claim holder whose unpatented claim was forfeited.2d 113 (1997). to remedy the situation would rewrite the Secretary's regulation and be contrary to the Supreme Court's holding in Locke.S. especially § 1744 (FLPMA)).. unless withdrawn or subject to valid existing mining claims.C. both surveyed and unsurveyed. Due to failure to make the required filings.4th 897.S. at 204 – 205. The Crummett court stated: With respect to mineral lands. all valuable mineral deposits in lands belonging to the United States. federal law provides “[e]xcept as otherwise provided.
63 Nev. Jordan.Rptr. Because his claims were valid when filed. 8 P. 683. v. § 363(f)(4). Id. The phrase “bona fide dispute” is not defined in the Bankruptcy Code.3d 229 (2000)(because the corporation made no payment for the 1996-97 assessment year. b. 357 (1946). In Pine Grove. e. See also In re Gaylord Grain L.N. at 383 – 384.in other words. the trial court correctly concluded that the disputed mining rights were open to appropriation when plaintiff located his claims after noon on September 1. 2006).. 62 Cal. Jordan v.2d 119. June 29.L. 20 . the locator failed to file such notice because its attorney was ill. Courts interpreting § 363(f)(4) generally look to “whether there is an objective basis for either a factual or legal dispute as to the validity of the asserted interest. at noon on September 1.. Id. at 383. Freeman et al.e. Any Claim of RGI in the Claims For Sale Is Subject To Bona Fide Dispute.) The decision in Locke was presaged by the Nevada Supreme Court decision. Therefore. Id. The foregoing facts and authorities demonstrate that any interest asserted in the Claims for Sale by RGI are subject to bona fide dispute under 11 U. a locator of unpatented mining claims was required. its claims were forfeited at the end of the prior assessment year .Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 20 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the United States is free and open to exploration. at 376. For one year. In finding that the original locator’s claims had been forfeited. App.C.C. No. The Nevada Supreme Court concluded that the illness of the attorney did not excuse the locator from filing the mandatory notice and that there was a period of time when the locator's unpatented claims were subject to relocation. See also. After the failure to file. staked) new unpatented claims “while the ground was open for relocation”. 168 Or. another party relocated (i. *10 (Bankr. to put forth $100 worth of work or improvements into the unpatented claims or file a notice of suspension with the county. 306 B.R. 624.. Id. the trial court did not err in quieting title in favor of the subsequent locator of claim.. occupation and purchase. 627 (8th Cir.J. at 907. 1996..S. Pine Grove Nevada Gold Mining Co. the Court rejected the original claim holders’ arguments based on the excusable neglect and similar doctrines to excuse the failure to comply with federal filing requirements. D. 05-60442. 1996.g.” In re NJ Affordable Homes Corp. under applicable federal law. 2006 WL 2128624. The Court agreed that the subsequent relocators had successfully relocated the unpatented mining claims.
336 B. in order for bankruptcy court to authorize trustee to sell tractor and trailer free and clear of creditor's liens. 594. S. 140 (Bankr. at 597 (quoting In re Gulf States Steel.R. The court does not have to resolve the dispute prior to the sale. 306 B. 2002).. § 544(a). Inc. of Ala.S.C. 128 (Bankr.Ill.C. 162 (Bankr.N.D. Inc.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 21 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 BAP 2004).R. See In re Bedford Square Associates.. on theory that creditor's liens were in “bona fide dispute”.R. Inc.S.D. E. the 21 .R. In re Taylor.N. The Claims For Sale Can Be Sold Free and Clear of RGI’s Claims.D. 125. 624 (8th Cir. at 627.D. To establish a bona fide dispute.D. Standing in the shoes of a subsequent bona fide purchaser of real property that is deemed to have perfected its purchase by recording the Claims For Sale being sold with the BLM.S. § 364(d)(4).R. 2005)..C. § 363(d)(4) is to “allow[ ] the sale of property subject to dispute ‘so that liquidation of the estate's assets need not be delayed while such disputes are being litigated. In re Durango Georgia Paper Co.C. 1986).Y.g. 590-92 (Bankr.R.C.D. 285 B. 247 B. L. In re Octagon Roofing. 357-58 (Bankr. it need only determine that such a dispute exists.S. 127. and In re Millerburg. at 507).D.L. 1995). E.. supra. 306 B.R.. 507 (Bankr. a bona fide dispute can arise from the challenge of a lien or interest under the “strong arm” powers vested in a trustee or debtor in possession under 11 U. 2000)(“bona fide dispute” under 11 U.N. Gaylord Grain L. 336 B.L.C. 596 (Bankr.C.R. 1990). N. 123 B. 452 & n.R. In re Oneida Lake Development. sale could proceed free and clear of creditor's liens if trustee could show some objective basis for avoiding liens. In re Gulf States Steel.’” Durango Georgia Paper Co. The goal of 11 U. 497. see also In re Collins.R.C. 180 B. D. under the Royalty Agreements. Va. Gaylord Grain L. 1996). See e. Ala. 583.1991). E.R.P. Penn... if any. 447. 285 B.R. 352. thus establishing a bona fide dispute). it is not necessary for the Debtor to have commenced an adversary proceeding prior to seeking to sell assets free and clear of liens under 11 U. BAP 2004)(validity and enforceability of creditor's security interest in bankrupt farmer's tractor and trailer did not have to be the subject of any immediate or concurrent adversary proceeding brought by chapter 7 trustee. Ga.. N. 61 B. 114 B. 544(a)(3) regarding enforceability of unrecorded provision in shopping mall lease although no adversary proceeding had yet been commenced). c.. 198 B. 7 (Bankr. 142.S. In addition.
reference is made to Relief Canyon Claims that are defined as the identical claims as annexed to the RGI Proof of Claim. In the 1996 Royalty Agreement. which are “Gross Proceeds” less “Expenses” for a particular period.C. Id. and without regard to any knowledge of the trustee or of any creditor.C. § 1107(a). § 544(a)(3) in the Claims for Sale. pg. at ¶¶ 1(k) and 2(a). a bona fide purchaser of real property. ¶ 1(d). against whom applicable law permits such transfer to be perfected. there can be no Additional Property because its existence is defined by an alleged interest in property (the “Current Property”) that no longer exists.] shall have. or may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by. other than fixtures. ¶ 1(p). pg. Similarly.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 22 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Debtor can avoid any alleged interest of RGI under 11 U. the Additional Property is a geographical reference to the Current Property that encompasses mining claims and other property rights that lie “within ten miles of any boundary of the Current Property. which are exactly those that are listed on the RGI Proof of Claim. § 544(a)(3). which provides in pertinent part as follows. the “Property” in which RGI claims an interest is composed of “Current Property” and “Additional Property”. whether or not such a purchaser exists. the rights and powers of. “Gross Proceeds” are based on the sale of “Minerals” and “Tailings”. that obtains the status of a bona fide purchaser and has perfected such transfer at the time of the commencement of the case.C. In addition. as of the commencement of the case. from the debtor. 1996 Royalty Agreement. In addition. As established above. 1997 Royalty Agreement. 2. the Debtor is unaware of any unpatented mining claims that were ever staked by Newgold that would constitute Additional Property.. 22 . Current Property is defined only as the mining claims that are described in Schedule A to the Agreement. RGI has no continuing interest in the Claims For Sale. those claims no longer exist and were forfeited or otherwise extinguished as a matter of law.S.” Because the Current Property has been extinguished.S. Trustee as lien creditor and as successor to certain creditors and purchasers (a) The Trustee [or debtor in possession in his stead.. The purported royalties are calculated based on 1% of the “Net Smelter Returns”. 4. under the 1997 Royalty Agreement.S.9 By the terms of the Royalty Agreements. pursuant to 11 U. both of which are 9 21 22 23 24 25 26 27 28 11 U. comes into play: § 544.
and (f).S. v. the sale of the Claims for Sale should be ordered free and clear of all other contractual provisions in the Royalty Agreements arising from or relating to the Original Claims.C.H. Due to the foregoing.”). Id. The TWA court reasoned that ‘interests in property’ under 11 U. 322 F.C. (s). at 289 (citations omitted).4th 505. 121 Cal.2d 443.” Sale of debtor's property was free and clear of lessee's possessory interest despite protections for lessee’s interest under 11 U. v.’ ” Id. at 290. Millenium Bank. the contracts to transport toxic materials. For example. Inc.3d 537.. Qualitech Steel SBQ.. courts have been unable to formulate a precise definition.D. United States. respectively. which stands in the shoes of a bona fide 23 .Rptr. which include the Relief Canyon Claims.2003) (“The Bankruptcy Code does not define ‘any interest.S. at ¶¶ 1(h). Inc.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 23 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 based solely on the “Existing Properties”. i. 2003) (plaintiff's “claim for personal injury does arise from the property being sold. § 363(f) ‘encompasses other obligations that may flow from ownership of the property. e. both of which the TWA court held constituted “interests” in property for purposes of § 363(f).S. C. 2003) court authorized the sale of substantially all assets free and clear of (1) employment discrimination claims and (2) a voucher program awarded to flight attendants in settlement of a class action.E.” Id. the Debtor. § 365(h)).. See also. Consequently.. 99 Cal. Precision Indus. Cal. Inc.R. 297 B. .C. § 363(f) to a wide variety of rights and obligations related to estate property. The Third Circuit stated that “[w]hile the interests of the [plaintiffs] in the assets of TWA's bankruptcy estate are not interests in property in the sense that they are not in rem interests.. they are interests in property within the meaning of section 363(f) in the sense that they arise from the property being sold. then there can never be royalties due and owing with respect to the Claims for Sale under the 1997 Royalty Agreement. 774. 781-82 (S. due to the broad application of Section 363(f). 327 F.e. the Royalty Agreements do not and cannot relate to the Claims for Sale as a matter of law. 448 (2002)(holding that contractual right to commission in event of sale of property leased from debtor is an “interest” in estate property that may be extinguished pursuant to section 363(f)).’ and in the course of applying 11 U. 545 (7th Cir. Myers v.App. the Third Circuit In re Trans World Airlines.g. (i). Because the Relief Canyon Claims – which are the sole basis of RGI’s Proof of Claim – no longer exist.G.3d 283 (3d Cir.. LLC. In addition.
C. Knupfer (In re PW.. exercised its prerogative to limit its ruling to the arguments presented by the parties. Clear Channel.” Clear Channel. the Bankruptcy Appellate Panel in Clear Channel did not address whether any non-contractual 24 . Due to the foregoing. The Bankruptcy Court approved the sale to the senior lender under section 363(f)(5) of the Bankruptcy Code. the Ninth Circuit has rejected the idea that decisions of Bankruptcy Appellate Panels bind all bankruptcy courts within the Ninth Circuit. The Bankruptcy Appellate Panel for the Ninth Circuit recently scrutinized section 363(f)(5) in the context of the sale of real property. First. Bank of Maui v. 472 (9th Cir.C.1990). at 42. nor would it dictate a different result. Inc. § 544(a) (3). v. In Clear Channel. See Clear Channel Outdoor.D.. 25 (9th Cir.2d 470. 391 B. free and clear of the interest of a nonconsenting junior lienholder outside of a plan of reorganization.S. however is neither binding on this Court. would purchase the Claims for Sale free and clear of any claim of interest by RGI under the Royalty Agreements. a “bona fide dispute” exists under 11 U.R. In addition.R. the proposed sale should be approved even under the dictates of that decision. Inc. Estate Analysis. In In re Jolan. in turn. and the Claims for Sale can be sold free and clear of RGI’s claims under the Royalty Agreements. The court in Jolan noted that the trustee who sought to approval of the sale free and clear of liens in Clear Channel never argued that there were any qualifying “legal or equitable proceedings” beyond cramdown under Section 1129 and that the Bankruptcy Appellate Panel. even if this Court were to view the Clear Channel decision as persuasive authority. finding that section 363(f)(5) permits a sale free and clear of the creditor’s interest in property “whenever a claim can be paid with money.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 24 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 purchaser under 11 U. 904 F. 2009) the court provided an analysis of the Bankruptcy Appellate Panel’s decision in Clear Channel and suggested that the scope of the Bankruptcy Appellate Panel’s ruling in Clear Channel should be narrowly construed.S. Id. the senior secured creditor attempted to purchase the debtor’s real property by way of a credit bid. § 363(f)(4). Inc. BAP 2008). 2009 WL 1163928 (Bankr. The Property can be sold free and clear of any liens or interests pursuant to Section 363(f)(5). Wash. W. 391 B. LLC). at 3. Accordingly. 5.
RCW 62A. the transferee takes the collateral subject to: (a) The debtor’s rights in the collateral. If a transferee does not take free of the rights and interests described in subsection 1. concluded that there are a number of legal and equitable proceedings available in Washington in which a junior lienholder could be compelled to accept a money satisfaction including. however. “a senior secured party’s disposition of collateral under the default remedies provided in part VI of Article 9” of Washington’s Uniform Commercial Code (specifically. with costs. a junior lienholder in Nevada could be compelled to accept a money satisfaction upon a senior secured party’s disposition of collateral under the default remedies as provided in: NRS 104. (Added to NRS by 1999.459 do not affect the right to 25 . rights of transferee regarding collateral. RL § 5502. 1769) NRS 40.462. with their liens attaching to proceeds in excess of the costs of sale and the obligation or judgment foreclosed. Except as otherwise provided by specific statute. 40.462 Distribution of proceeds of foreclosure sale. Id. (b) The security interest or agricultural lien under which the disposition is made.457 and 40. 888.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 25 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 mechanisms exist whereby a lienholder might get less than full payment yet lose its lien. § 365(f)(5).4. which operate to clear junior lienholders’ interests.S. Similarly here. [1911 CPA § 560. The court in Jolan. even if the secured party fails to comply with this article or the requirements of any judicial proceeding.455.9A-617) and the disposition of real property through “judicial and nonjudicial foreclosures. 2. 10 10 15 16 17 18 19 20 21 22 23 Specifically. the court may cause the same to be paid to the person entitled to it pursuant to NRS 40. and (c) Discharges any subordinate security interest or other subordinate lien. and in the meantime may direct it to be deposited in court. The provisions of NRS 40. 1. this section governs the distribution of the proceeds of a foreclosure sale. at 3 .” Id. and (c) Any other security interest or other lien. 3. 1. at 3.440 Disposition of surplus money. A secured party’s disposition of collateral after default: (a) Transfers to a transferee for value all of the debtor’s rights in the collateral. including: 24 25 26 27 28 NRS 40. NCL § 9049]—(NRS A 1989. without limitation. legal and equitable proceedings are available in Nevada which parallel those Washington statutes and proceedings discussed by the court in Jolan satisfy 11 U.C. (b) Discharges the security interest under which the disposition is made. 355) Or upon the judicial or nonjudicial foreclosure of real property under applicable Nevada law. If there is surplus money remaining after payment of the amount due on the mortgage or other lien. A transferee that acts in good faith takes free of the rights and interests described in subsection 1.9617 Effect of disposition of collateral by secured party after default.
26 . reasonable attorney’s fees and other legal expenses incurred by the foreclosing creditor and the person conducting the foreclosure sale. As used in this section. (d) Payment of the balance of the proceeds. including the exercise of a trustee’s power of sale pursuant to NRS 107. “subject to the court’s approval. Such a demand is effective upon personal delivery or upon mailing by registered or certified mail. The proceeds of a foreclosure sale must be distributed in the following order of priority: (a) Payment of the reasonable expenses of taking possession. does not affect the right of the purchaser to the distribution of proceeds pursuant to paragraph (c) of subsection 2 of this section. provide: (a) Proof of the obligation upon which the claimant claims a right to the proceeds. to the debtor or the debtor’s successor in interest. the Debtor respectfully submits that any party who asserts a lien against the Property that the Debtor proposes to sell.457 and 40. If there are conflicting claims to any portion of the proceeds. and the subsequent disposition of the property. “foreclosure sale” means the sale of real property to enforce an obligation secured by a mortgage or lien on the property. the receive those proceeds. THE DEBTOR SHOULD BE AUTHORIZED TO ASSUME AND ASSIGN THE CONTRACTS. 40. Failure of a claimant to provide the required proof within 15 days after the effective date of the demand waives the claimant’s right to receive those proceeds. to the last known address of the claimant. B. in a legal or equitable proceeding. upon the written demand of the person conducting the foreclosure sale. (b) Satisfaction of the obligation being enforced by the foreclosure sale.” If there has been a default on any executory contract or unexpired lease. could be compelled. [to] assume or reject any executory contract or unexpired lease of the debtor. Section 365(a) authorizes a debtor in possession. to the extent provided in the legally enforceable terms of the mortgage or lien. the person conducting the foreclosure sale is not required to distribute that portion of the proceeds until the validity of the conflicting claims is determined through interpleader or otherwise to the person’s satisfaction. in their order of priority. any advances. to accept a money satisfaction of its interest. which vests at the time of the foreclosure sale. 3.. maintaining.. applicable taxes and the cost of title insurance and. or to obtain a deficiency judgment pursuant to NRS 40. 4. the Debtor can sell the Property free and clear of any interests of liens in the Property pursuant to Section 363(f)(5). return receipt requested.080. . unless that proof appears in the official records of a county in which the property is located.455. protecting and leasing the property. Barring exceptions not herein relevant. the costs and fees of the foreclosure sale. and (b) Proof of the claimant’s interest in the mortgage or lien. including reasonable trustee’s fees. Accordingly. (c) Satisfaction of obligations secured by any junior mortgages or liens on the property. A person who claims a right to receive the proceeds of a foreclosure sale pursuant to paragraph (c) of subsection 2 must. 2. if any.459.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 26 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Based on the foregoing. The purchase of any interest in the property at the foreclosure sale.
. 1057. The Contracts will only be assumed and assigned to facilitate the proposed sale. 106 S.2d 1043. the Debtor believes is in the best interests of the estate. 190 B.R. 1985).S. the order approving the sale of the Property will provide that assumption and assignment of each of the Contracts will not be effective until the respective Cure Amounts are paid. In re Central Fla.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 27 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 debtor cannot assume such contract or lease. or provides adequate assurance that the debtor will promptly cure. 124 (Bankr. 1047 (4th Cir.S. In this case. 1991). 1285. § 365(b)(2).D. 89 L. 1996). In reviewing a debtor in possession’s decision to assume or reject an executory contract. 25 (2d. at 415. citing Lubrizol Enterprises v. Therefore.3d 18.R. Based on the 27 . N. 193 B.D. a bankruptcy court should apply the “business judgment test” to determine whether it would be beneficial to the estate to assume it. 756 F. Inc. such default.R. 411. 11 U. A debtor in possession may assume or reject executory contracts for the benefit of the estate. Further. (2) compensates. and (3) provides adequate assurance of future performance under such contract or lease. see also In re Gucci. only the Contracts designated by the successful accepted bidder will be assumed and assigned. 124 B.Ct. Cir. 193 B. Metal Fabrication. 1995). S.D. In re Continental Country Club. Fla.R.R. The business judgment standard requires that the court follow the business judgment of the debtor unless that judgment is the product of bad faith. In addition. 763. or provides adequate assurance that the debtor will promptly compensate a party for any actual pecuniary loss to such party resulting from such default.2d 592 (1986). supra.Ed...C. the Debtor submits that the “business judgment test” has been satisfied. Fla. 1996). 119. denied.D. 415 (S. 381 (Bankr. Richmond Metal Finishers. 767 (Bankr. 114 B. as discussed. In re Klein Sleep Products. Fla.N. 475 U. which. Inc. In re Gucci. 378. As discussed above. 1990). M. whim. the successful accepted bidder will be required pay the Cure Amounts so as to allow the Debtor to assume and assign such Contracts. Bank or any successful accepted bidder will provide adequate assurance of future performance under such Contract. unless the debtor (1) cures. To the extent required by any party to a Contract. or caprice. 78 F.Y. Inc. In re Prime Motors Inns. This will ensure that the Cure Amounts will be paid to the other parties to the Contracts before any assignment of their respective Contracts will occur. cert. all of the foregoing requirements have been or will be met.
(c) authorizing the Debtor to assume and assign executory contracts and unexpired leases as designated by the Purchaser pursuant to 11 U.S. (b) approving the form of such Purchase Agreement as may be presented by the Debtor and the Purchaser at or before the hearing on this Motion. (2) the counterparty will prosecute its objection and the amount of the cure shall be resolved at the hearing on this Motion or such other time as may be set by the Court. or will be. and deeming the failure of a counter-party to a particular Contract to object to the proposed cure amount and assumption and assignment to be a waiver of such objection. (e) finding that Purchaser is a good faith buyer under 11 U. either: (1) the Debtor will negotiate with such counterparty and reach a consensual resolution. then such failure to timely object shall cause the Cure Amount to be conclusive and binding on such counterparty without leave for further consideration before this Court. the Debtor submits that the requirements of Section 365(b) have been. and (i) granting such other relief as appropriate in the best interests of the estate. interests and encumbrances under 11 U. or (3) the Purchaser may not designate such Contract for assumption and assignment under the Purchase Agreement. § 363(m).S. § 363(f) to a successful bidder for some or all of the Property in accordance with Sales Procedures Order. satisfied. If any counterparty to a contract objects to the Cure Amounts as set forth in Exhibit “B” to the Klepfer Sale Declaration.S. § 365. However. (d) approving the cure amounts for the Contracts to be assumed and assigned by the Debtor to the Purchaser set forth on Exhibit “B” to the Klepfer Sale Declaration. the Debtor respectfully requests that the Court enter an order (a) authorizing the Debtor to sell the Property free and clear of liens. For the foregoing reasons. (h) that notice of this Motion was proper. IV.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 28 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 foregoing. (g) authorizing the Debtor to take such other actions and execute such documents as necessary to consummate the Purchase Agreement. if any counterparty fails to timely object to the Cure Amounts set forth on Exhibit “B” to the Klepfer Sale Declaration.C.C. CONCLUSION. A proposed Order Authorizing And Approving: (1) Sale Of Real Property And Certain Personal Property Assets Pursuant To 11 28 .C. (f) waiving the 14-day stay period provided in Federal Rule of Bankruptcy Procedure 6004(h) and 6006(d).
C.. Debtor-In-Possession 29 . 2010. Claims. Dated this 12th day of November.S. Said proposed order will be subject to revision based on the bids received for the Property. § 363 Free And Clear Of Liens. And (2) Assumption And Assignment Of Lease Under 11 U.C. § 365 is annexed hereto as Exhibit “1”. /s/ Edmond Buddy Miller Edmond Buddy Miller Special Counsel for Firstgold Corp.S.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 29 of 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 U. And Interests.
Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 30 of 44 EXHIBIT 1 EXHIBIT 1 .
2010 Time: 2:00 p.C. Suite C Reno. § 363 FREE AND CLEAR OF LIENS.S. CLAIMS.C. AND INTERESTS. AND (2) ASSUMPTION AND ASSIGNMENT OF LEASE UNDER 11 U.S. ORDER AUTHORIZING AND APPROVING: (1) SALE OF REAL PROPERTY AND CERTAIN PERSONAL PROPERTY ASSETS PURSUANT TO 11 U. debtor in possession 13 14 15 16 17 FIRSTGOLD CORP. § 365 Hearing Date: December 6.com 8 Edmond “Buddy” Miller Submitted on: 12/ /2010 12 Special Counsel for Firstgold Corp.m. In re UNITED STATES BANKRUPTCY COURT DISTRICT OF NEVADA Case No.. NV 89509 10 Telephone: (775) 828-9898 Facsimile: (775) 828-9893 11 bmiller@buddymillerlaw.GWZ Chapter 11 Debtor.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 31 of 44 1 2 3 4 5 6 7 The Law Office of Edmond “Buddy” Miller 9 1610 Montclair Avenue.. BK-N-10-50215. Place: Ctrm. 3 18 19 20 21 22 23 24 25 26 27 28 1 .
and (3) Related Relief” (the “Sale Motion”). timely. 6004 and 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy 27 Rules”) and in compliance with the Bidding Procedures. that: 9 A. § 365.S. §§ 157 10 and 1334.C. the Sale 24 Hearing. and this matter is a core proceeding pursuant to 28 U. 2010 on the 2:00 p. such notice was good and sufficient. 2010 (the “Sale Procedures Order”) for 19 giving notice of the Sale Motion and the Sale Hearing and the assumption and assignment of 20 the Contracts. And Interests. pursuant to Bankruptcy Rules 8 7052 and 9014. 23 D.S. This Court has jurisdiction over the Sale Motion pursuant to 28 U. Claims. (2) Assumption And 17 Assignment Of Executory Contracts And Unexpired Leases Under 11 U. This order constitutes a final and appealable order within the meaning of 28 U. § 157(b)(2)(A). § 365.C. and 4 Interests.m. For Order Authorizing And Approving: (1) Sale of Real and 3 Personal Property Assets Pursuant to 11 U. §§ 1408 12 and 1409. 14 B.S. And (3) 18 Related Relief entered by this Court on November 8. the Court held a hearing on the 2 “Motion By Firstgold Corp.C. Claims. The Debtor has followed the procedures set forth in the Order Approving Sale 15 Procedures with Respect To The: (1) Sale Of Real And Personal Property Assets Pursuant To 16 11 U. Proper. the sale of the Property and the assumption and assignment of the Contracts has been 25 provided in accordance with sections 102(l). and no other or further notice of the Sale 2 .C. 105(a).C.C.S. § 363 Free and Clear Of Liens. 363 and 365 of the Bankruptcy Code and 26 Rules 2002.S.S.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 32 of 44 1 On December 6. § 363 Free And Clear Of Liens. The bidding procedures established by the Sale Procedures Order (the 22 “Bidding Procedures”) have been fully complied with in all material respects. 28 and appropriate under the particular circumstances.S. adequate and sufficient notice of the Sale Motion. (2) Assumption and Assignment Of Executory Contracts and Unexpired Leases 5 under 11 U. 13 § 158(a).S. 21 C. calendar. Appearances at the 6 hearing were as set forth on the record. Venue of this case and the Sale Motion in this district is proper under 28 U.C. (N) and 11 (O).C. 7 IT IS HEREBY FOUND AND CONCLUDED.
The Debtor has also demonstrated compelling circumstances for the 28 Sale and the assumption and assignment of the Contracts. 18 I. the Sale Hearing. The Debtor has full corporate power and authority to execute the Asset 19 Purchase Agreement and all other documents contemplated thereby. The Property was marketed 7 and the sale process was conducted in compliance with the Bidding Procedures. except for the Purchaser.] 16 H. and the bid 14 submitted by the Purchaser as reflected in the Asset Purchase Agreement is the highest and 15 best offer for the Property. the assumption and assignment of the Contracts. 26 K. 21 The Debtor has all the corporate power and authority necessary to consummate the 22 transactions contemplated by the Asset Purchase Agreement. The Asset Purchase Agreement reflects the exercise of the Debtor’s sound 17 business judgment. the orders of 8 this Court and the requirements of applicable law. Approval at this time of the Asset Purchase Agreement and consummation of 24 the Sale. A reasonable opportunity to object or be heard with respect to the Sale Motion 4 and the relief requested therein has been afforded to all interested persons and entities. sufficient and sound business purpose and 27 justification for the Sale. and the sale of the 20 Property has been duly and validly authorized by all necessary corporate action of the Debtor. 5 F. 9 G. and. 23 J. without limitation. Creditors. including.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 33 of 44 1 Motion. The Debtor has demonstrated good. 3 E. is in 25 the best interests of the Debtor and its creditors and bankruptcy estate. As a result. [The Purchaser was the only party that submitted a Qualified Bid for the 10 Property. no person or entity 12 has submitted a bid of any sort since such deadline. pursuant to the terms of the 13 Sale Procedures Order. without the filing and confirmation 3 . No other person or entity submitted a Qualified Alternative Bid by the deadline 11 established in the Sale Procedures Order. the Sale and the assumption and assignment of the Contracts or the 2 entry of this Sale Order is required. the Debtor was not required to conduct the Auction. parties-in-interest and other entities have been afforded a reasonable 6 opportunity to bid for the Property under the Bidding Procedures.
3 the value of the Property is likely to depreciate rapidly in the absence of the Sale. The Purchaser is not an insider of the Debtor as that term is 9 defined in section 101(31) of the Bankruptcy Code. The Asset 14 Purchase Agreement was not entered into for the purpose of hindering. (ii) represent the highest and best offer for the 19 Property. as such. liens. 22 encumbrances and interests of any kind or nature whatsoever except the Permitted Liens. 4 L.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 34 of 44 1 of a plan of reorganization or liquidation in these cases. The Asset Purchase Agreement was negotiated. 10 M. 21 O. is entitled to all of the protections afforded thereby. None of the Debtor or the Purchaser has engaged in any conduct that 7 would cause or permit the Asset Purchase Agreement or the Sale to be avoided under section 8 363(n) of the Bankruptcy Code. as a result. including. the 2 Debtor has insufficient financing to continue its on-going business operations and. The 25 interests of non-debtor parties with security interests. claims. claims. The 12 Purchaser will be acting in good faith within the meaning of section 363(m) of the Bankruptcy 13 Code in closing the transactions contemplated by the Asset Purchase Agreement. in good faith. 17 N. in each case. claims. The terms and conditions of the Asset Purchase Agreement and the purchase 18 price thereunder (i) are fair and reasonable. (iii) will provide a greater recovery for the Debtor’s creditors than would be 20 provided by any other practical alternative and (iv) constitute fair consideration. encumbrances and other 26 interests of any kind or nature whatsoever in the Property are adequately protected. without limitation. liens. and from arm's-length 6 bargaining positions. one or more of the 24 requirements set forth in section 363(f) of the Bankruptcy Code has been satisfied. encumbrances and other interests shall attach to the 28 proceeds of the sale of the Property to the same extent (and in the same priority and subject to 4 . because 27 such security interests. The Debtor may sell the Property free and clear of all liens. proposed and entered into by 5 the Debtor and the Purchaser without collusion. territory. 23 described in Section __ of the Asset Purchase Agreement. or district thereof. The Purchaser is a good faith purchaser within the meaning of section 363(m) 11 of the Bankruptcy Code and. delaying car 15 defrauding creditors under the Bankruptcy Code or under the laws of the United States or any 16 state. possession.
to the Sale and the assumption 5 and assignment of the Contracts are deemed to have consented pursuant to sections 363(f)(2) 6 and 365 of the Bankruptcy Code. be liable for any 27 liens. 9 P. of or 15 against the Debtor. without limitation. contingent or otherwise. liabilities. based on any theory of antitrust or successor 17 or transferee liability. Those non-debtor parties with liens. liens. or who withdrew their objections. claims. responsibilities or claims of any kind or nature whatsoever. except those expressly assumed by the Purchaser in Section ___ of the 26 Asset Purchase Agreement or if the Purchaser would. claims. 11 Q. except those 28 expressly assumed by the Purchaser in Section __ of the Asset Purchase Agreement. or in the future could. without limitation. Other than as expressly set 19 forth in the Asset Purchase Agreement or any liability under Contracts assumed by Purchaser 20 pursuant to 11 U. claims. encumbrances and interests of any kind or nature whatsoever. whether known or 14 unknown. 13 commitments. the transfer of the 12 Property to the Purchaser will not subject the Purchaser to any debts. claims.C. existing as of the date hereof or hereafter arising. or any other person by reason of such transfers 16 and assignments. § 365. 5 . Those non-debtor parties 3 with liens. encumbrances and interests of any kind or 25 nature whatsoever. encumbrances and interests of any kind or nature whatsoever in the 4 Property who did not object. The Purchaser will not consummate the Sale. obligations.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 35 of 44 1 the same limitations) as such security interests. Purchaser will have no successor or vicarious liabilities of any 21 kind or character and will under no circumstances be deemed Debtor’s successor. The transfer of the Property to the Purchaser will vest the Purchaser with good 10 and marketable title to the Property. including. encumbrances 7 and interests of any kind or nature whatsoever in the Property who did object fall within one 8 or more of the other subsections of sections 363(f) and 365. the assumption and assignment 23 of the Contracts and other transactions contemplated thereby if the Sale of the Property to the 24 Purchaser is not free and clear of all liens. claims. 22 R. any affiliate of the Debtor. including.S. Consummation of the Sale. except that the Purchaser shall only be liable for payment of the 18 liabilities assumed in Section__ of the Asset Purchase Agreement. encumbrances and other 2 interests were attached to the Property immediately before the sale.
To 23 the extent any of the foregoing findings of fact constitute conclusions of law. any 7 default existing prior to the date hereof under each of the assigned Contracts. upon the assumption and assignment to Purchaser thereof. 5 T. as applicable in accordance with the 6 Asset Purchase Agreement.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 36 of 44 1 S. within the meaning 13 of sections 365(b)(1)(C) and 365(f)(2)(B) of the Bankruptcy Code. cure costs) that must be paid in order for the Debtor to assume and assign 3 the Contracts to the Purchaser are set forth on Exhibit “B” to the Sale Motion (the “Cure 4 Amounts”). they are adopted 24 as such. or provided adequate assurance of curing. within the 8 meaning of Section 365(b)(1)(A) of the Bankruptcy Code. 2 without limitation. and based on the findings and for the reasons set 28 forth on the record. 25 Having considered the Sale Motion. Each of the Debtor and/or Purchaser. 14 U. is hereby found to be 16 adequate assurance of future performance under section 365(f)(2)(B) of the Bankruptcy Code. Cause exists not to 22 apply the automatic ten (10) day stay imposed by Bankruptcy Rules 6004(g) and 6006(d). There is no legal or equitable reason to delay the Sale. having found notice to have been adequate 27 and appropriate under the circumstances. No defaults exist in the Debtor’s performance under the Assigned Contracts or 18 the Assigned Leases as of the date of this Sale Order other than the failure to pay amounts 19 equal to the Cure Amounts set forth in Exhibit B to the Sale Motion or defaults that are not 20 required to be cured as contemplated in section 365(b)(1)(A) of the Bankruptcy Code. Under Section 365 of the Bankruptcy Code. and (iii) provided adequate 12 assurance of Purchaser's future performance under the assigned Contracts. the other 26 pleadings and filings in this bankruptcy case. (ii) provided compensation or 9 adequate assurance of compensation to any party for any actual pecuniary loss to such party 10 resulting from a default prior to the date hereof under any of the assigned Contracts. within 11 the meaning of section 365(b)(1)(B) of the Bankruptcy Code. has (i) cured. 21 W. the evidence filed in support thereof. 17 V. Purchaser's undertaking to fulfill all future performance obligations under the 15 Contracts. 6 . the only amounts (including.
in its sole discretion at 19 any time prior to the Closing. 22 4. The Closing of the Sale and the 10 other transactions contemplated thereby are hereby approved and authorized under Section 11 363(b) of the Bankruptcy Code. that have not been withdrawn. 25 5. security interests. and Purchaser shall buy. judgments. liens. easements. the Debtor 23 is relieved from any and all liability for any breach of any assigned Contract occurring 24 after such assignment as provided for under Section 365(k) of the Bankruptcy Code. 7 . remove any Contract or lease from Exhibit __ to the Asset 20 Purchase Agreement. Purchaser may. but rather shall be an Excluded Asset. demands. the Debtor shall (i) assume and assign to Purchaser the Contracts identified on 14 Exhibit __ to the Asset Purchase Agreement free and clear of all liens and claims unless 15 otherwise provided by Section ___ of the Asset Purchase Agreement and (ii) execute and 16 deliver to the Purchaser such documents or other instruments as may be necessary to 17 assign and transfer such Assigned Contracts and Assigned Leases to the Purchaser as 18 contemplated by the Asset Purchase Agreement. 7 2.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 37 of 44 1 2 THE COURT HEREBY ORDERS as follows: 1. valid and effective transfer of the Property. All persons and entities given notice of the Sale Motion 5 that failed to timely object thereto are deemed to consent to the relief sought therein 6 including without limitation all nondebtor parties to the Contracts. an 21 Assigned Contract or an Assigned Lease. pledges. Upon assumption and assignment to Purchaser of the Contracts. as applicable. All objections to the Sale Motion 3 and entry of this Sale Order. Pursuant to Section 365 of the Bankruptcy Code. Pursuant to sections 363(b) and (f) of the Bankruptcy Code. The Asset Purchase Agreement and the transactions contemplated thereby 8 are hereby approved in all respects. effective as of the 13 Closing. the Debtor is 26 authorized to and shall sell. The transfer of the Property by Debtor to the Purchaser 9 shall be a legal. 12 3. deeds 28 of trust. encumbrances. The Sale Motion is granted in all respects. in which case such Contract or lease shall not be. the Property on the terms and 27 conditions set forth in the Asset Purchase Agreement free and clear of all mortgages. waived or settled are 4 hereby overruled on the merits. if any.
rights-of-way. In furtherance of the foregoing and except for Claims that Purchaser is 23 expressly assuming in Section ___ of the Asset Purchase Agreement. use. any rights. whether imposed by agreement. 5 claims. understanding. inchoate. voting or 2 other restrictions. whether incurred 4 voluntarily or arising by operation of law. for any liens or claims of the Debtor or liens or claims in any way whatsoever 26 relating to or arising from the Property or the Debtor’s operations or use of the Property. restrictions. rights. 22 6. contractual commitments. obligations. claims (as that 9 term is defined in the Bankruptcy Code). Purchaser is not 24 assuming nor shall it in any way whatsoever be liable or responsible. fixed or 14 otherwise (the foregoing are collectively referred to as "Claims" herein). other than the 15 Permitted Liens and and any other liabilities set forth in Section __ of the Asset Purchase 16 Agreement which are expressly assumed by Purchaser (the “Claims”). as a successor or 25 otherwise. shall be transferred to and attach to the net proceeds of the Sale 19 under the Asset Purchase Agreement (after the payments specified herein) to the same 20 extent and in the same priority that they encumbered the Property prior to the Closing 21 Date. contingent.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 38 of 44 1 restrictions or charges. arising prior to the Closing Date or relating to acts occurring prior to the Closing 12 Date. encroachments. Other than the 17 Permitted Liens. grants or interests of any kind or nature of any person or entity other than 6 the Debtor under the contracts. 10 options. absolute. equity or otherwise and whether 13 known or unknown. and including. on or prior to the Closing Date or any liens or 28 claims that in any way whatsoever relate to periods on or prior to the Closing Date or are 8 . guaranties. demands. 27 including. law. building. disclosed or undisclosed. interests and matters of any kind and 11 nature. the Contracts. without limitation. 8 and all debts arising in any way in connection with any acts of the Debtor. any liens or interests that encumber or are found to encumber or purport 18 to encumber the Property. licenses and agreements set forth on Schedule __ to the 7 Asset Purchase Agreement (the foregoing are collectively referred to as "Liens" herein). licenses. liabilities. covenants. conditional sale or other title retention agreements and interests (as 3 defined in section 363(l) of the Bankruptcy Code) of any kind or nature. without limitation.
or any liens or claims calculable by reference to the Debtor or its assets or 4 operations. the Federal Rehabilitation Act of 1973. which Pre-Closing Liens and Claims are hereby 6 extinguished for all purposes as to Purchaser. (ii) any pension. which may be asserted on any 28 basis. practices and programs. debts. the presence of hazardous. without limitation. compensation or other employee benefit plans. discharged or performed on or prior to the Closing Date (in each case. practices and programs. claims or obligations arising from conditions first existing 26 on or prior to the Closing Date (including. 18 agreements. without limitation. any pension plan of the Debtor. 9 . obligations that might otherwise arise from or 19 pursuant to the Employee Retirement Income Security Act of 1974. as a 10 successor or otherwise. or 23 the Worker Adjustment and Retraining Notification Act. dismissal of employees. the Age Discrimination and 21 Employment Act of 1967. welfare. or contamination substances or wastes). or under or in connection with (i) any employment or labor 12 agreements. welfare. change-in-control agreements 13 or other similar agreements to which the Debtor is a party. except as provided in this Sale 9 Order or the Asset Purchase Agreement. under the Comprehensive Environmental Response. without limitation. 15 including. for Pre-Closing Liens and Claims. 14 compensation or other employee benefit plans. (v) 25 environmental liabilities. severance arrangements. polluting. Purchaser shall not be liable or responsible. the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). or termination of employment or labor 17 agreements or pension. (iii) the cessation of either of 16 the Debtor’s operations. the Fair 20 Labor Standard Act. agreements. 24 occupational disease or unemployment or temporary disability insurance claims. paid. the National Labor 22 Relations Act. or relating to continuing conditions existing on or prior to the Closing Date (the 5 “Pre-Closing Liens and Claims”).Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 39 of 44 1 to be observed. including. Title VII of the Civil Rights Act of 1964. 2 including any liens or claims that result from. 27 toxic. Without limiting the generality of the foregoing. as amended. whether calculable by reference 11 to the Debtor or its operations. consulting agreements. without regard to whether the claimant 7 asserting any such Pre-Closing Liens and Claims has delivered to Purchaser a release 8 thereof. relate to or arise out of tort or other product 3 liability claims). (iv) workmen's compensation.
The Debtor is authorized to execute. pursuant to the Bankruptcy Code. (B) or (C) of the Bankruptcy Code in order to 8 effectuate. except to the extent that 10 Purchaser has assumed such liabilities under the Asset Purchase Agreement.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 40 of 44 1 Compensation and Liability Act. with respect to the Sale. In the absence of a stay pending appeal. the assumption by the Debtor and assignment 9 to Purchaser of the Assigned Contracts and Assigned Leases. if the Purchaser and the Debtor 15 elect to close under the Asset Purchase Agreement at any time after entry of this Order.S. 14 7. documents. debts. debts. the Debtor for taxes of any kind for any period. (ix) any liabilities. commitments or obligations for any transfer or similar taxes. as a purchaser in good faith. § 9601 et seq. including any property taxes. (x) any cure amounts 7 payable pursuant to Section 365(b)(1)(A). and instruments of transfer and take such other action that may be 22 reasonably necessary to perform the terms and provisions of the Asset Purchase 23 Agreement. and confirming to the Purchaser. whether pursuant to any federal laws or otherwise. and other 21 assurances. (vi) any bulk sales or similar 2 law. 19 8. assignments. transferring. or required to be paid 3 by. (vii) any liabilities. 10 . deeds. (xi) any 11 liabilities. any commitments or obligations of. (xii) any litigation. 4 commitments or obligations for any taxes relating to the operations or Property for or 5 applicable to any pre-Closing tax period. the Purchaser. commitments or obligations of any kind under any contract or lease that is 12 not an assigned Contract. acknowledge and deliver such 20 corporate name change certificates. shall be entitled 17 to the protections of section 363(m) of the Bankruptcy Code if this Sale Order or any 18 authorization. or reducing to possession. debts. and shall take any other action for purposes of assigning. 24 granting. (viii) any liabilities.C. 6 debts. 16 then.. and (xiii) any products liability or similar 13 claims. conveying. 42 U. any or all 25 of the Property and to execute such nonmaterial amendments to the Asset Purchase 26 Agreement and related agreements as may be required to effectuate the letter and intent of 27 the Asset Purchase Agreement and the consummation of the Sale to the extent 28 contemplated by the Asset Purchase Agreement. conveyances.
(ii) compel delivery of the Property to the Purchaser. 16 13. Subject to the provisions. except as otherwise 7 specifically determined by the Court. any waivers and consents thereunder. 11 estopped. any default existing as of the date of the Sale Hearing. 4 10. (iv) resolve any disputes. notwithstanding any provision in any such assigned 8 Contract (including those of the type described in sections 365(b)(2) and (f) of the 9 Bankruptcy Code) that prohibits. and neither the Debtor nor the Purchaser shall be required to execute or file 11 . and permanently enjoined from asserting against the Debtor or the Purchaser. Purchaser assumes none of the Debtor’s other 15 leases and contracts and shall have no liability whatsoever thereunder. (v) interpret.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 41 of 44 1 9. this Court retains jurisdiction to (i) enforce and 17 implement the terms and provisions of the Asset Purchase Agreement. The Contracts listed on Exhibit __ to the Asset Purchase Agreement shall. or 12 the property of any of them. 26 14. implement and enforce the 23 provisions of this Sale Order and (vi) protect the Purchaser against any claims. Other than the Contracts. be deemed to be valid and binding and in full force and 6 effect and enforceable in accordance with their respective terms. defense. At or after the Closing. 5 upon assignment to the Purchaser. or conditions such assignment or transfer. The provisions of this Sale Order authorizing the Debtor to enter into the 27 Asset Purchase Agreement and authorizing the transactions contemplated thereby shall be 28 self-executing. all amendments 18 thereto. causes of 24 action or other liabilities of whatever nature that it did not expressly assume under the 25 Asset Purchase Agreement. controversies or claims arising out of or 22 relating to the Asset Purchase Agreement. Each non-debtor party to an assigned Contract is hereby forever barred. (iii) compel 20 delivery of the purchase price and all adjustments to the purchase price under the Asset 21 Purchase Agreement. the Debtor is authorized to pay any expenses or 2 costs that are required to be paid in order to consummate the Sale or perform their 3 obligations under the Asset Purchase Agreement. 14 12. setoff or any other claim asserted or assertable against the Debtor. and each of the agreements executed in 19 connection therewith. restricts. or any 13 counterclaim. 10 11.
state. and local officials. and (ii) binding upon and shall govern the acts of all 19 entities. 11 16. Notwithstanding the foregoing. or contract. to which Claims remain assertable). trademarks or other intellectual property. administrative agencies. including. recorders of mortgages. This Order is binding upon and inures to the benefit of any successors or 9 assigns of the Debtor or the Purchaser. the 4 Debtor. on the 12 Closing Date and after consummation of the Closing and payment of the Purchase Price as 13 provided for herein. title 20 companies. recorders of deeds. termination statements. 28 as against the Purchaser. counterclaim. and all other persons and 23 entities who may be required by operation of law. to which the Liens attach as previously provided. consummate and implement fully the Asset 6 Purchase Agreement consistent with their obligations under the Asset Purchase 7 Agreement. No claim of any kind asserted by the Debtor at any time against any party to 27 any one of the Assigned Contracts or the Assigned Leases shall entitle such party to assert. or other instruments in order 2 to effectuate consummation to implement the foregoing provisions hereof except as 3 expressly provided in the Asset Purchase Agreement. defense or offset. the duties of their office. all Liens And Claims existing as to the Property prior to the Closing 14 have been unconditionally released. or who 25 may be required to report or insure any title or state of title in or to any of the Property. 26 17. Purchaser and all other parties are authorized and directed to take any and all 5 actions necessary and appropriate to effectuate. file. This Sale Order is and shall be (i) effective as a determination that. federal. filing officers. governmental 22 departments. to 24 accept. registrars of deeds. all filing agents. secretaries of state.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 42 of 44 1 any releases. consents. or as against the Debtor’s 17 estates. discharged and terminated as charges against the 15 Property and/or the Purchaser (but not as against any other person or entity or the proceeds 16 of the Sale. 8 15. or affect or impair in 12 . registrars of 21 patents. register or otherwise record or release any documents or instruments. assignments. any claim. and that the conveyance of the Property 18 described herein have been effected. without limitation. including any trustee appointed in any subsequent 10 case of the Debtor under Chapter 7 of the Bankruptcy Code. title agents.
. 20 made applicable to this proceeding pursuant to Federal Rule of Bankruptcy Procedure 21 9014. 17 21. Nothing contained in any plan of reorganization or liquidation confirmed in 14 these Cases or any Order of this Court confirming such plan or any other order entered in 15 these Cases shall conflict with or derogate from the provisions of the Asset Purchase 16 Agreement or the terms of this Sale Order. debtor in possession ### . The provisions of this Sale Order and the Asset Purchase Agreement are 12 non. 3 18. 11 19. 13 20. 26 27 28 13 Special Counsel for Firstgold Corp.severable and mutually dependent. The findings of fact set forth above and conclusions of law stated herein and 18 made on the record at the hearing on the Sale Motion shall constitute this Court’s findings 19 of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052. without limitation. The Court hereby orders that the ten-day stays provided for in Bankruptcy 4 Rules 6004(g) and 6006(d) shall not be in effect with respect to the Sale and the other 5 transactions contemplated in the Asset Purchase Agreement (including. Esq. non-appealable order. 22 Prepared and Submitted by: 23 THE LAW OFFICE OF EDMOND “BUDDY” MILLER 24 /s/ Edmond “Buddy” Miller 25 Edmond “Buddy” Miller. and thus this Sale Order 7 shall be effective and enforceable immediately upon entry. Any party objecting to this 8 Order must exercise due diligence in filing an appeal and pursuing a stay or risk its appeal 9 being foreclosed as moot in the event that the Purchaser and the Debtor elect to close prior 10 to this Order becoming a final. 6 the assumption and assignment to the Purchaser of the Contracts).Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 43 of 44 1 any respect the obligations of such party to the Purchaser under any one of the Assigned 2 Contracts or the Assigned Leases.
or failed to respond. or 15 case. as indicated 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 below [list each party and whether the party has approved. as indicated below [list each party and whether the party has 8 approved. or failed to respond to the document]: 9 X This is a chapter 9. and each has approved or disapproved the order. . disapproved.Case 10-50215-gwz Doc 232 Entered 11/12/10 13:11:11 Page 44 of 44 1 In accordance with LR 9021. and no parties appeared or filed written objections. I have 5 delivered a copy of this proposed order to all counsel who appeared at the hearing. and either with the motion. or failed to respond to the document]: ___ I certify that I have served a copy of this order with the motion. or at the hearing. or failed to respond. any unrepresented parties who appeared at 11 the hearing. and I have delivered a copy of this proposed 10 order to all counsel who appeared at the hearing. and each has approved or disapproved the 7 order. any 6 unrepresented parties who appeared at the hearing. counsel submitting this document certifies as follows 2 (check one): 3 4 ___ The court has waived the requirement of approval under LR 9021. disapproved. 11. This is a chapter 7 or 13 case.
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