USA Springs auction remains on schedule

USA Springs assets are up for auction again, with the same Sept. 14 bid deadline and the same scheduled Sept. 28 auction date.

On Aug. 16, the U.S. Bankruptcy Court said the would continue on the same schedule that was set before the company's bankruptcy was switched from Chapter 11 reorganization to Chapter 7 liquidation.

The only difference is that the auction will be conducted by the trustee, and not by the owners of USA Springs, who have been holding out for possible last-minute financing to salvage the company and its controversial plan to bottle up hundreds of thousands of gallons of groundwater in the Nottingham area and sell it overseas.

After four years of failed attempts to obtain financing, USA Springs' lawyers set up an auction that was originally supposed to take place in July. But after filing for a delay in July, the attorneys quit, as the company's owners moved to other counsel in an attempt to protect the permits and sell the company as a going concern.

That's when the U.S. bankruptcy trustee's office moved to convert the case from Chapter 11 reorganization to Chapter 7 liquidation, leaving the scheduled Sept. 21 auction in doubt.

But on Aug. 16, the trustee's office filed a motion saying that it believed the auction should go ahead, with the same procedures as before. Those procedures would allow the trustee to find one or more "stalking horses" that would put down an initial bid. Other bids would have to top it by paying a "breakup fee" that the stalking horse would be entitled to.

Leading creditor Roswell Commercial Mortgage could also put in a credit bid, based on the mortgage it holds on the property. Roswell, which has been pushing for the auction to continue, maintains that it is owed some $13.2 million on principal and interest on the mortgage.

Whether there will be an actual auction on Sept. 28 depends on whether there is any interest from bidders, Smith said.