The following came my way. I thought it of interest to this group. --------------------------------------------
Following a November 15, 2004, court hearing, United States Bankruptcy Court Judge Dennis O'Brien ordered that the parties battling over the terms of any sale of the Gopher State Ethanol assets present their cases before him at an evidentiary hearing on December 1. At that hearing, the parties are to present evidence on the motion of GSE's mortgage holders, Bruce Hendry and Glen Nelson, seeking permission that would allow them to bid on the property and to take possession of it free and clear of any liens. Opposing the motion at the November 15 hearing date was Ramsey County, which has a property tax lien on the property for well over a million dollars. Also appearing to oppose the motion were the committee of unsecured creditors and Farmers Mill & Elevator, Inc., both of which involve creditors owed substantial sums of money by GSE.
While the court did grant the motion that would allow the sale of the property free and clear of any liens, the issue for determination at the December 1, 2004, hearing will be whether the mortgage holders (Hendry and Nelson) will be allowed to bid on the property in a manner that would leave the other creditors will no real hope of recovery. Those opposing Hendry and Nelson's right to place bids are expected to argue that Hendry and Nelson should be "equitably subordinated" to the other creditors by virtue of their management of the property over the last months of operations. The opposition papers filed by the unsecured creditors indicates that the committee is investigating distributions of close to a half million dollars made to a company controlled by Nelson shortly before the filing of the bankruptcy petition as well as other "significant distributions" made by GSE within the year prior to the filing of the petition.
The sale of the assets is scheduled for early 2005, but it is unclear whether the results of the evidentiary hearing might delay any sale.
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