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Allied Nevada Gold asks court to disband official equity committee
By Caroline Salls
Pittsburgh, Aug. 3 – Allied Nevada Gold Corp. asked the U.S. Bankruptcy Court for the District of Delaware to disband the official committee of equity security holders appointed for the company’s Chapter 11 case, according to a motion filed Friday.
“Enough is enough,” the company said in the motion. “The debtors have suspended their mining operations. A swift emergence from bankruptcy has been curtailed, the equity committee’s scorched-earth tactics are continuing unabated, and a valuation fight is plainly inevitable.”
Until the committee is disbanded, Allied Nevada said “every dollar that the debtors continue to burn fighting with the equity committee is a dollar taken from the recoveries of the debtors’ unsecured creditors,” who are projected to receive a recovery of less than 10% on their claims.
The company said it has consistently maintained since the start of the cases that it is “hopelessly insolvent” and that the equity holders are not entitled to a recovery on account of their interests.
“Unfortunately, recent events – including a material decline in the debtors’ cash flow, resulting in the mining suspension plan, and the scorched earth litigation tactics relentlessly pursued by the equity committee’s latest round of professionals – have rendered the debtors even more hopelessly insolvent and heightened the need to disband the equity committee and stop the bleeding,” the motion said.
In order for equity to be entitled to any recovery, Allied Nevada said its enterprise value must exceed at least $590 million. The company’s financial experts have determined that the enterprise value ranges from $200 million to $300 million, according to the motion.
A hearing is scheduled for Aug. 20.
Allied Nevada is a Reno, Nev.-based gold and silver miner that filed for bankruptcy on March 10. Its Chapter 11 case number is 15-10503.
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