Federal Bankruptcy Judge Brendan Shannon will hold hearings Monday and Tuesday in Delaware that may decide the future of state mineral leases at the now-bankrupt Essar Steel Minnesota project in Nashwauk.
At stake are 350 Iron Range jobs, more than $1 billion of investment capital, tens of millions of dollars owed Minnesota contractors and millions of tons of top-grade iron ore under the Essar site.
The judge is weighing arguments by the state of Minnesota that the leases should be handed back to the state because Essar, which filed for bankruptcy in July, reneged on contractual commitments.
But virtually every other party in the Essar bankruptcy case is asking the judge to keep the leases inside the bankruptcy case. They want the leases treated like every other asset in the shuttered $1.9 billion taconite mine and processing plant project that has been sitting half-built but idle for nearly one year.
Those parties include dozens of contractors, vendors and other northern Minnesota businesses who have unsecured debt as yet unpaid by Essar. Those little guys — The Official Committee of Unsecured Creditors — are siding against the state and Gov. Mark Dayton and with Essar’s successor, SPL Advisors, who are trying to broker a deal to take over the project, pay off some of the Essar debt and restart construction.
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