USA Springs judge puts off auction decision



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USA Springs could continue to pursue financing that has so far proved elusive in an attempt to bail it out of bankruptcy, or it could put itself up for auction, but it can't do both for very long, said Judge J. Michael Deasy on Monday, as he put off any decision on a slew of increasingly acrimonious filings related to the case."I don't see how you can have both processes live at the same time," Deasy said, suggesting that the parties reach a firm deadline to "ride one horse or the other."But the Pelham-based company - which has been trying for more than a decade to launch a business to bottle 300,000 gallons of groundwater a day, despite the tenacious opposition of some residents in the Barrington and Nottingham area is trying to saddle both at the same time.Monday's hearing was held to allow Deasy to rule on a series of objections to USA Springs' proposed procedures to put the property up for auction on July 20 if a promised $60 million loan from Switzerland-based Malom Group AG fails to materialize.Malom insisted that its long-delayed deal is imminent, but the proposed auction would throw everything off."The Debtor can still jump off the cliff if it wants to make the Malom financing impossible, although that too will have serious, irreversible consequences to the estate," wrote Bill Gannon, who represents Malom.The acrimony seems to be one more chapter in the ongoing controversy surrounding USA Springs.After spending millions of dollars to obtain a permit, the company ran out of money, filing for Chapter 11 bankruptcy in the summer of 2008 to stave off creditors until it could find alternative alternatives.Malom, the company's latest rescuer, had promised to raise $60 million by October 2011, but the financing has faced one obstacle after another, including the detention by Swiss authorities of two of Malom's principals relating to fraud charges against another company and the company's difficulty in converting to cash some dubious Brazilian notes.Malom missed its previous April 30 deadline and it expects to miss its latest deadline -- Tuesday, May 15 -- because a "death in the family of an accountholder" prevented confirmation from Brazil and India to go through, said Hans-Jurg Lips, one of Malom's principals.Lips said the deal is expected to close in the next few days, but at a lower price than initially expected. Still, it would result in about $6 million in initial funding for USA Springs, Lips said.Attorneys for USA Springs, having grown tired with the repeated delays and assurances, proposed procedures to put the property up for auction, while at the same time continuing to hope that somehow Malom would come up with the money.The proposed procedures, however, raised objections from a variety of creditors, including Roswell Commercial Mortgage, which originally lent the company about $8 million, but now claims it is owed about $13.2 million with interest.Roswell insisted that it has the right to buy back the property with a "credit bid" if there wasn't enough raised at the auction -- something USA Springs had agreed to in the past.It dismissed USA Springs' attempt to sweeten the deal by throwing a noncontiguous property in Raymond owned by a related trust, noting that the two acres of land was secured with a $200,000 mortgage but is assessed at $76,400.The trustee seconded Roswell's motion on the credit bid and raised a host of issues of its own, including how the funds would be distributed after auction.USA Springs basically got everybody to put their objections on hold, if they had the right to be named one of the "consulting parties" that would have a say on the sale.Neither of the parties could veto the sale, but if they did raise objections, then Judge Deasy would be asked to mediate the matter.Deasy asked them to put the agreement in writing so that he could look it over. -- BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW Edit ModuleShow Tags