ANOTHER NEWS ARTICLE FYI !!!
The Bre-X Saga:
Fortune or Folly?
Lawyer urges receivership for Bre-X
Wednesday 17 September 1997
Stephen Ewart, Calgary Herald
A lawyer representing some of the investors in Bre-X Minerals Ltd. wants the disgraced mining company placed in receivership before all the money he said rightfully belongs to shareholders has disappeared.
Bre-X is spending hundreds of thousands of dollars every week on a court-appointed monitor of its finances as well as its own private investigators while it survives under court protection from creditors, Clint Docken said.
"I'm not sure if shareholders are getting value on all of this money that is being spent," Docken said outside court Tuesday. "The question we're raising at this point is whether bankruptcy isn't the appropriate option sooner rather than later."
Docken, who represents more than 75 Bre-X shareholders, was one of a battery of lawyers from across Canada and the United States who appeared before Justice Robert Cairns in Alberta Court of Queen's Bench.
Cairns granted Docken permission to cross-examine Bre-X chief executive David Walsh on statements he made in an affidavit last spring into what has been called the biggest fraud in mining history.
The lawyers return to court next month to deal with the fees of the monitor Price Waterhouse, the cost of the private investigation and Bre-X's plans to reorganize.The court protection of Bre-X while it completes its reorganization expires Oct. 31.
Cairns adjourned the proceedings after an hour and urged the battery of lawyers to "get their ducks in a row" before they return Oct. 2.
Bre-X rose from a penny stock to a company with a stock market value of more than $6 billion before it crashed last spring. Docken said shareholders actually lost about $1 billion in their original investments.
Bre-X has had more than five months to design a restructuring plan that would satisfy the courts, but court-appointed monitor Price Waterhouse has seen no evidence of a plan, Docken said.
"There is nothing ... to indicate that there has been any progress," he said.
Howard Gorman, the lawyer for Bre-X, reminded Cairns that Bre-X has not been convicted or even charged with any crimes so its officials should not be treated as criminals.
He suggested Bre-X may seek an extension to reorganize.
Bre-X wants to pay the legal costs for a group of directors including Walsh, said an affidavit filed last week by Price Waterhouse. Those directors earned more than $100 million last year selling Bre-X shares, trading records show.
Bre-X has given seven directors including Walsh and former vice-chairman John Felderhof $100,000 US each out of a $5-million trust fund set up offshore in 1996. Any additional money from the fund must be approved by Price Waterhouse.
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