The Bankruptcy Court for the Eastern District of New York approved an $8 million Chapter 11 loan for Kumtor Gold Company — a Centerra subsidiary — after restricting the ways in which the lender could enforce its liens on the debtor’s assets in the Kyrgyz Republic, which is seeking to have the bankruptcy tossed after seizing Kumtor gold mine. Law360 reports.
The Centerra’s attorney Pauline K. Morgan said during a hearing Thursday that the debtor-in-possession financing was needed for Kumtor Gold Company to pay the costs of running its bankruptcy case, because the government of Kyrgyzstan had seized most of the company’s assets.
U.S. Bankruptcy Judge Lisa G. Beckerman said that since Kumtor Gold Company filed for bankruptcy in June, she has tried to thread a delicate needle in giving the company relief it has requested while also not implicating Kumtor Gold Company’s assets in Kyrgyzstan, which are the subject of an international arbitration proceeding over their rightful ownership.
The court’s specific concern was that the DIP lenders — subsidaries of Centerra Gold Inc. — were being given a lien on all of the debtor’s assets and if Kumtor Gold Company defaults on the package, the lender would be able to enforce those liens on the operational assets of the company located in Kyrgyzstan.
Judge Beckerman agreed to approve the DIP order with the caveat that no lien enforcement actions can occur in the Kyrgyz Republic unless the bankruptcy court denies Kyrgyzstan’s motion to dismiss the case.
A hearing on the motion to dismiss is scheduled for early February.
Kumtor Gold Company, the Centerra subsidiary that operated the gold mine before the government seized it, filed for Chapter 11 bankruptcy protection in New York court in June, just days after mine operations were taken over by Kyrgyz government-appointed managers.
Last month, Judge Beckerman denied a motion from Kumtor Gold Company seeking $1 million per day in sanctions against the Kyrgyz government for its actions in adopting laws concerning the corporate ownership of the mine and making statements about the status of future contracts between the government and Kumtor Gold Company.
