Canada's Bre-X bankrupt, but not parent company-yet
Reuters Story - November 05, 1997 21:57
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By Jeffrey Jones
CALGARY, Alberta, Nov 5 (Reuters) - Shareholders and
creditors of disgraced gold explorer Bre-X Minerals Ltd. won a
partial victory on Wednesday when the company was declared
bankrupt, opening the door to claims against it.
Accounting firm Deloitte & Touche was appointed trustee of
Calgary-based Bre-X's dwindled assets.
However, one group of Canadian shareholders suing firms
controlled by Bre-X Chief Executive David Walsh were frustrated
in an attempt to also drive parent company Bresea Resources
Ltd. into bankruptcy at the same time.
In a hearing in a Calgary court on Wednesday, Justice
Robert Cairns ruled Bresea was as insolvent now as it was in
May, when it got bankruptcy protection after the infamous Bre-X
gold scandal was revealed, so it should be bankrupt too.
But the decision was stayed pending an appeal by the
company, which could take up to a month to prepare.
Bresea owned 23.5 percent of Bre-X, whose shareholders
watched in horror last spring when C$6 billion worth of their
equity in the company was reduced to dust and its Busang gold
property was deemed to be a fraud.
Cairns also released C$25,000 (US18,000) to the company
from a court-controlled C$26 million ($19 million) in Bresea
funds so Bresea could continue to operate in the interim.
A group consisting of hundreds of shareholders from Alberta
and British Columbia had hoped to put Bresea out of business
and take operational control of the firm from Walsh.
A competing group of investors from Ontario that have also
launched a lawsuit had struck a deal with Walsh and his legal
team last week that would have included Bre-X agreeing to
bankruptcy, but Bresea would continue to operate for another
120 days.
Lawyers for Walsh said Bresea, which still owns the Calgary
office building that his companies occupied, had among its
strategy plans to upgrade the squat, brown building so more
rent could be obtained from tennants.
Clint Docken, a lawyer representing the Alberta and British
Columbia shareholders said he was disappointed by the granting
of the appeal because it left Walsh "a little window where some
kind of deal could be made."
It appeared Walsh was considering one.
In an affidavit filed with the court on Oct. 21 and made
available to reporters on Wednesday, Walsh outlined a business
plan where he would reorganize Bresea into an oil and gas
company.
In the document, he outlined a potential purchase of
Canadian oil and gas properties for C$86 million ($62 million),
taking on C$66 million ($48 million) in debt to make the deal.
"He's dreaming," Docken said after the hearing. "One day
it's a real estate company, the next day it's oil and gas.
What's it going to be tomorrow?"
Since the revelation that the gold found in drill samples
at the Indonesian property was added later from other sources,
Bre-X's and Bresea's business has consisted mostly of winding
down operations, funding a private investigation into the crime
and building a legal defense.
Bre-X, Bresea, their management, financial adviser J.P.
Morgan & Co. Inc. , stock underwriters and engineering
consultants are all targets of at least three lawsuits in
Canada and the United States. |
