Judge orders USA Springs lender to fulfill $60m deal

p>A U.S. bankruptcy judge has ordered Swiss financing firm Malom Group AG to hand over the $60 million it had promised to lend USA Springs, the bankrupt company that has sought for more than a decade to build a controversial bottling plant on the border of Nottingham and Barrington.The judge reaffirmed the judgment after Malom protested that it only agreed to lend that money because USA Springs “misrepresented” that it had in hand agreements to sell millions of gallons of bottled groundwater overseas.But Judge J. Michael Deasy told Malom’s attorney that it’s too late to raise that issue.”Malom had time to conduct due diligence prior to committing to fund the debtor’s plan,” he wrote.Thus far, it doesn’t appear there is much hope for USA Springs to collect on the judgment anytime soon, since no move has been made to alter the scheduled July 20 auction of the company.The legal battle with Malom is the latest twist in the ongoing saga of USA Springs, which has spent millions of dollars obtaining a permit to extract as many as 300,000 gallons a day at its site, despite heated opposition of residents, who have complained that the company planned to suck their aquifer dry to sell water outside the country.While the state finally granted the permits, USA Springs ran out of money and filed for bankruptcy in June of 2008, with its plants half full and permits unused, trying to get alternative financing.After getting burned by several other lenders, USA Springs found Malom, which agreed to lend it $60 million, with the first money due at the end of October. Malom wanted $1.2 million up front, money that was forked over by a USA Springs insider in exchange for the promise of a nice little profit at closing.That closing never happened. Malom kept asking for more time, offering a series of bizarre explanations, from the detention of two of the company’s executives by Swiss authorities to the difficulty of convincing someone to pay millions of dollars for some dubious Brazilian notes.At each delay, Malom reaffirmed its promise to close the deal.Finally, USA Springs and its creditors had enough, and the court scheduled an the for July 20.That’s when the legal fireworks began.Malom, said it now doubted the existence of those overseas water contracts and filed a motion asking USA Springs to produce evidence of them. Meanwhile, USA Springs filed a motion against Malom’s Florida attorney, asking about where its insider’s $1.2 million deposit is – a request to which Malom objected as a violation of attorney-client privilege.On May 23, Deasy sided against Malom on both motions, arguing, in some many words, that the Malom deal was dead, so the company had no business demanding documents on the transaction.On May 25, USA Springs asked the court to declare a $60 million judgment against Malom for reneging on the deal, and on June 5 Deasy granted that judgment. – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW