Geneva Steel has filed a reorganization plan with the U.S. Bankruptcy Court for the District of Utah that will liquidate its assets and pay off creditors.
In addition, the court has approved the demolition of Geneva's remaining industrial facilities.
Geneva's exit plan is competing with two other plans also filed with the court. Secured and unsecured creditors are in current negotiations with all three plan proponents. Ultimately, creditors will choose one of the plans.
The secured creditors, which are owed $128.3 million, would be paid 100 percent of their claims under all three plans. But unsecured creditors, which are owed between $60 million to $80 million, are treated differently under each of the plans.
Under Geneva's plan, unsecured creditors would receive 80 percent of what they are owed after secured claims are paid, said J. Thomas Beckett, an attorney representing the Official Committee of Unsecured Creditors. The so-called "Anderson" plan would pay unsecured creditors $40 million over a four-year period. And a third plan filed by Silver Point Capital would pay unsecured creditors 25 percent of everything collected after the secured creditors are paid.
"There is an upside potential for the creditors in Geneva's plan that isn't there in Anderson's plan," Beckett said. "But on the other hand, there may be less risk with Anderson's plan. Silver Point would apparently pay about 25 percent of everything that is collected after the secured debt is paid."
The demolition of Geneva's core industrial facilities was delayed in September after California-based Sierra Railroad Co. said it had a new technology that could modify the existing blast furnaces, allowing the company to burn tons of landfill waste or oil shale, which in turn would generate energy and create thousands of new jobs.
Ken Johnsen, Geneva's chief executive officer, said the economics of Sierra's plan fell well short of Geneva's proposal to develop the property into a commercial and residential hub.
Geneva's unsecured creditors supported a delay of Geneva's demolition in order to learn more of Sierra's plan. However, the unsecured creditors have since agreed that demolition should proceed.
"Sierra Railroad is out," Beckett said. "We concluded that we wanted to go in another direction. The creditors sided with Geneva and said let's begin demolition immediately and let's get it done as soon as possible."
In February, China-based Qingdao Iron & Steel Group Co. purchased Geneva's core industrial equipment for $40 million. The remaining facilities will be dismantled and sold as scrap by California-based CST Environmental Inc.