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IN THE UNITED STATES COURT OF FEDERAL CLAIMS
BID PROTEST
TIP TOP CONSTRUCfION, INC. Plaintiff,
) ) ) ) ) ) )
v.
THE UNITED STATES, Defendant.
No.08-352C Judge Lynn J. Bush
SUPPLEMENTAL DECLARAnON OF PERCY J. HOLLINS
L~, .l'.my.J:.
Hollins,JUll.Jmd have been the President ofIip Top_Csmstnlction, Inc.
("Tip Top") at all relevant times. All of the statements herein are based on my personal knowledge. 2. Shortly after the Federal Highway Administration ("FHWA") rejected my bid, and after getting approval from the surety's agent, I sent my February 21,2008 e-mail to the Contracting Officer, Wanda Peffer, in which I offered a substitute asset on the surety's behalf. I followed up that e-mail with a telephone call to Ms. Peffer and informed her that the surety was willing to provide a substitute asset or cash in support of the bid bond we provided. She stated that the FARs would not allow for a substitute asset by the individual surety and that she would not accept it. 3. I swear under penalty of perjury that the foregoing statements are true and correct to the best of my knowledge and belief.
Percy J. Hollins President, Tip Top Construction, Inc.
Date: June 27, 2008
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DECLARATION OF EDMUND C. SCARBOROUGH I, Edmund C. Scarborough, being duly sworn, do depose and state under the penalty of perjury that the following is true based on my personal knowledge. 1. I am an adult and am competent to testify herein. 2. I am the individual surety who provided the bid bond to Tip Top Construction Corporation ("Tip Top") for the Federal Highway Administration ("FHWA") project at issue in the Court of Federal Claims protest known as Case No.1 :08-cv-003S2-LJB ("this Case"). 3. I am not a corporate surety, and the bond provided in this Case was not provided by a corporate surety or any other entity. It was provided by me as an individual surety. 4. As of this date, I have written more than 200 bonds to the Federal Government. Information regarding some of the bonds I have written for the Federal Government, including the FHWA, is contained as part of my Response to the Agency Report ("Response") in the related bid protest before the Government Accountability Office ("GAO"), which Response I understand is a part of the administrative record in this Case. The listing of bonds accepted by Federal Government agencies, including FHWA, is incorporated herein by reference. 5. Several of the more than 200 bonds I have written have been backed by the same coal asset (but a different allocated portion or location) owned by me and pledged in this Case, and others have been backed by similar stockpiles of coal. 6. Although as an individual surety I am able to and do write bonds for contractors of all sizes, my surety services benefit mainly small, minority, disadvantaged, woman-owned and service disabled veteran-owned contractors who, for various reasons including but not limited to lack of bonding capacity, lack of a track record of performance, and/or an insufficient balance sheet cannot qualify for or obtain corporate surety bonds.
AR701
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Gauley Coal Corporation formerly assigned and released any right, title or interest to the subject gob piles by a November 2003 letter. Based upon these series of transactions, it is apparent New Gauley Coal Corporation and Lady H Coal Company conveyed not only the surface of the R707 Property but also the gob piles contained thereon. Correspondingly, there are no provisions contained within any of the transactions we have reviewed indicating the gob piles were excepted or reserved during the course of these transactions. Hence, we believe that there is no question the purchase by Mr. Mullens and
the subsequent conveyance to you in October 31, 2007, included the surface as well as
all coal waste/refuse piles located on the R707 Property.
Research reveals most of the case law dealing with ownership of "mine tailings" turn on whether the tailings from a mining operation are characterized as real or personal property. In this particular instance, it is doubtless the parties intended the gob piles would not be regarded as appurtenant to the land. Instead, the gob piles were always treated as personal property and were within the parcel conveyed to you on October 31,2007. See,
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Trf-Bullion Corp. v. American Smelting and Refining Co., 57 N.M. 787, 277 E.2d 293 (1954); London Extension Mining Co. v. Ellis, 134 F.2d 405 (CA 10 Col. 1943).
We are hopefUl the above discussion satisfies you r inquiry, but ifyou have questions or require additional information, please do not hesitate to contact Norm Daniels or me.
DANIELS LAW FIRM, PLLC
AR702
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7. My program fills a gap in the market created by decisions of many corporate sureties not to bond smaller contractors and/or policies that have the same effect. Therefore, I believe (and many Federal contracting officers have expressed to me) that my bonding program creates opportunities for small, minority, disadvantaged, woman-owned and service disabled veteran owned contractors, the very group of contractors that the FAR's socioeconomic provisions intend to assist. 8. As part of providing my bonds, I provide other related services and benefits to the project owner and contractor, such as project and contract review, underwriting, risk management, project monitoring, construction consulting/advice, early intervention (including funds control) in situations where problems related to the bonded contractor arise, and take over of a job. These additional activities/services protect not only me as the surety but also, in my opinion. the Government or private project owner and contractor. To the extent that I can prevent problems before they arise or quickly and decisively intervene once problems arise (which is inevitable, in the construction industry), this benefits all parties concerned. 9. Some of these other activities and services are provided by me, personally, and some by other individuals and entities on my behalf. 10. For purposes of marketing and selling my services, and to explain to contractors and owners that my service as an individual surety offers more than simply a bond, I and some of the documents related to my individual surety bonds sometimes refer to the entire package of services and benefits as the "Scarborough Bonding Program." 11. The "Scarborough Bonding Program" is not a corporation, partnership, sole proprietorship, unincorporated association, non-profit or not-for-profit entity. It does not issue
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AR703
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surety bonds and did not execute the bid bond at issue in this Case. It is in the nature of a trade name for my individual surety bonds and related services. 12. Separate from my status and activities as an individual surety, I am an officer and owner or part owner of several other companies, including but not limited to International Bonding and Construction Services, Inc. ("IBCS"). 13. IBCS is a risk management, construction consulting, and claims processing corporation providing services to me, in my individual capacity as a surety, as well as to other unrelated individuals, entities and companies. 14. To the extent that IBCS acts as my program risk manager and claims processor, it is part of the total package of benefits/services that I provide to owners and contractors - but that is not to be confused with the fact that I and I alone issue and personally back and/or purchase backing for my individual surety bonds, including the bid bond provided in this Case. 15. To back my bonds, I have in the past used several assets. The asset used to back the bid bond at issue in this Case is the stockpile of coal as described in the Standard Form 28 ("SF 28"), Affidavit ofIndividual Surety, and incorporated Certificate of Pledged Assets. 16. The pledged coal is presently in the form of coal refuse, also known in the coal industry as Gob Piles. For purposes of the bid bond in this Case, and as I have done on other Federal Government bonds, I pledged an allocated portion of the coal refuse/coal I own. 17. The pledged allocated portion is part of the same stockpile from which I have pledged other allocated portions for other Federal Government bonds. 18. This being said, the same allocated portion is not pledged for more than one bond - i.e., there is no "double-pledging." The aggregate dollar value of coal refuse/coal pledged by all outstanding bonds I have written does not exceed the total value I own.
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AR704
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19. The Alliance Consulting, Inc. Report ("Alliance Report") is but one report that supports or documents the value of the coal I own, and it happened to be the most recent report at the time I was asked to provide support for the coal asset in support of Tip Top's protest at the GAO. I note that the data on which the Alliance Report is based was obtained from independent analyses performed to determine the amount of sellable coal in 2006 and January 2008- i.e., at least one of which was performed before the date of the bid bond and even the date I purchased the R707 Property. To the extent the Government is suggesting that the Alliance Report was based on information I provided, that is incorrect and language which gives rise to such a suggestion was clarified in a later version of the Alliance Report. Since purchasing the R707 Property, I have continued to conduct tests and analyses through independent firms. 20. At the time I wrote the SF 28 and incorporated/attached the Certificate of Pledged Assets for the Tip Top bid bond, I had what I consider to be reliable information and analyses upon which to base my assertion as to the total value of my coal assets, as well as the value of the allocated portion pledged for the bid bond in this Case. 21. In its filings in this Case, the Government implies that coal refuse (i.e., Gob Piles) is trash and has no value, which is incorrect as evidenced in part by the fact that I bought it and Alliance's valuation. Coal refuse is the byproduct of previous coal mining operations. Such coal refuse, including valuable coal which was then deemed uneconomical to separate from the other materials removed from the ground with it, was placed in on the surface of the ground, often pits and valleys, such as the R-707 Property. 22. The coal refuse I own which is located on the R707 Property contains significant amounts of coal which were not removed by the processes then employed and contains other non-coal materials such as rock, shale, slurry and clay.
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AR705
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23. With today's technology, and factoring the recent spikes in worldwide coal prices, the remaining coal in many coal refuse sites, including my own, can be readily and economically extracted. I am in the business (among others) of doing just that. To my knowledge, I have not said that my processing plant is actually processing the coal refuse at this time and if I did that was never my intent. Such processing is scheduled to begin during this Summer of 2008. I have, however, been heavily involved for several months in precursor activities including due diligence reviews, surveys, construction of the processing plant, and pennitting issues. I note that, based on my understanding and advice provided to me, nothing in the Federal Acquisition Regulation requires that this asset be processed at the time of the bond or any default. 24. The coal refuse I own contains significant amounts of relatively high quality coal. I have been advised that this coal is high quality Met Coal with 12,000 BTUs and with less than 14 % ash and 3% sulphur. Coal meeting this description has a price equal to or higher than the "spot price" for steam coal and can be sold either to processors "as is" or following processing. 25. To my understanding, Sohnen Coal Sales, Inc. 's ("Sohnen") written offer to a mining company of mine of $79 per ton was based on such market pricing infonnation as well as existing independent data regarding the coal, and was not based on infonnation or representations from me. I believe it is clear from the language of Sohnen's letter that the $79 per ton offer is a "worst case price," with the price per ton to be higher if the coking characteristics turned out to be better than Sohnen's minimum requirements stated in the offer. 26. The pledged coal refuse/coal is located on the R707 Property. I alone own the surface rights to the R707 Property, including the right to process or use the coal refuse/coal on that property.
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AR706
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27. My coal refuse/coal stockpiles are located such that one centrally located processing plant can service all, and the coal can be trucked to a nearby barge or rail head, allowing economical shipping of the coal. The transfer of the ownership of the coal occurs when the coal is delivered to the railcar or barge. 28. I have been infonned by experts that the value of the coal I own significantly exceeds the value of all known processing, transportation and transaction costs, the total cost of which has been estimated. The processing of the coal refuse material to extract the remaining valuable coal and the steps required to get the coal to market is, in my opinion, economically viable, which is why I have entered into this business and am in the process of obtaining all required state and any other license required to allow me to do so. 29. Coal refuse can also be sold "as is" - i.e., without first being processed - at a profit, although generally a higher profit can be made if the owner first processes the coal refuse to extract the coal contained within. To my knowledge and belief, a sale of all or a portion of unencumbered coal refuse I own would net more than the penal sum of the bid bond in this Case. 30. I have relied on the Alliance Report and other analyses in estimating the value of my coal assets. As a result of the Alliance Report and other infonnation, I believe my coal to be worth approximately the amount stated in the bid bond documents and perhaps even more today, but in any case significantly beyond the penal sum of the bid bond and even the aggregate amount of bonds I have written. 31. Based on my experience, and that of other knowledgeable personnel in the coal business, including the consultant Charles Steven Robinson who provided an affidavit in support of my Response in the GAO bid protest, which is part of the administrative record in this case, coal including the coal refuse I own, is a widely traded commodity and a readily marketable asset.
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AR707
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32. The coal pledged to back the Tip Top bid bond is readily marketable and readily could be sold in unprocessed form. 33. As an individual surety, it is in my economic interest to minimize defaults by bonded contractors. Although I strive very hard to do so, and believe I have an enviable track record, contractor defaults are an inevitable part ofthis business. 34. I have always made good on my bond obligations to the Govemment. Of course, the law provides me and any other surety a number ofprotections and defenses and, where applicable, I have relied on the same. However, it is my policy to, and I believe I have, promptly dealt with each and every meritorious bond claim. 35. It is my opinion that the Government's position in this case is based, at least in part, on the misunderstanding that, in the event of a contractor default, the Govemment can simply and without further action or notice to the surety take possession of the asset and sell it. This is not the case. In the event of a contractor default, the contracting officer must look to the surety and only if the surety defaults on his obligation after a demand can the Government then reach and sell the pledged asset. 36. I am advised that one of the rights I have as a surety in the event of a contractor default and valid demand by the contracting officer is to satisfy the demand with any assets available to me once I have determined that the claim on the bond is valid. 37. Another option would be to obtain a loan from a financial institution using the in place coal refuse as collateral for the loan and use the proceeds of the loan to pay the bond obligation. Based on the amount of coal refuse/coal I own, I am advised that I could obtain a loan in an amount exceeding the value of the bid bond at issue in this case.
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38. Yet allother option is to tum o\NXUll'Sbip oftbe- coal refuse in piece over to 1bc
GovemmenL
39. In tho past. upon receipt ot a claim. J have paid the amount of the surety's obligation
from other assets 1 own or called upon reinsurers of d10 lS~t to provide cash in lieu of
converting the asset, which is my right 83 a suretY. No contraetlng offlcer hIlS complained about
how 1 settled claims as a aurety. 1have never bad to tell coal (or any other commodity 211m
pleclgod) to IIUke $Ood on a claim tued under 4 bon4 I have issued.
40. UTi), Top bad defauhed and t had been ca1100 \IPOIl to make aood on m)' bid bond
obligation. I would have tim covered the abliptiol'l with other aslC1S Iown. I have lufficiel1t
other wetI 10 cover rhis bid bond obllgaliDn. 41. Mon:over, I have sufticleJrt otber assetS which comply with the FAR that. if unable to
l*'SWlde tilt· CO to aeeept the coal, I could and would have substituted IUCh IISIets tor the coal.
The available assets for substi-mtion incllUk, but 81'lt 1&0, limited to. cash and cash cqui"a.tonta.
42. Had tho ComraatiDQ Officer ("CO") asked me for infoJmation or documentation
rtprding the quality and value ofthe coal which J pledged tobaok the bid bond, or otherwfst
supparriDs lhe esset, t could and would bave provided the same. She did no' ask.
Plmber your d~Jan:&u ssyetb not.
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AR709
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LEGAL MEMORANDUM
TO: FROM:
DATE:
Ed Scarborough IBCS Group, Inc. Gene W. Bailey, II June 26, 2008 R707 Property - Ownership Interest in Minerals Contained in Gob Piles
RE:
You have requested Daniels Law Finn, PLLC review the law regarding ownership interest in minerals contained within waste or refuse piles commonly referred to as "gob piles" pursuant to the conveyance of real property situate in Nicholas County, West Virginia, commonly known as the "R707 Property." It is our understanding by deed dated October 31,2007, Barry and Melinda Mullens conveyed all right, title and interest to the surface of the R707 Property to you. That deed is recorded in Deed Book 444, pages 427-429, in the records of the County Clerk of Nicholas County, West Virginia. During that transaction, the Mullens also sold their complete interest in and to any and all coal waste/refuse piles located on the R707 Property. We understand from Mr. Mullens that at the time he acquired the R707 Property from Lady H Coal Company during bankruptcy proceedings, he also acquired all right, title and interest to the gob piles located on the property. New Gauley Coal Corporation is the predecessor in interest to Lady H Coal Company, and Mr. Mullens advises that the vice president and regional manager for New
DANIELS LAW FIRM, PLLC
AR710
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AFFIDAVIT OF BARRY MULLENS
STATE OF WEST VIRGINIA; COUNTY OF NICHOLAS
I, Barry Mullens, being duly sworn, do depose and state under the penalty of perjury that the following is true based on my personal knowledge. 1. 2. I am an adult and am competent to testify herein. I have over 39 years of experience in the coal mining industry. For part of those 39 years, specifically from 1971 to 1987, I was employed by the Sewell Coal Company as an engineer during which time I learned of the tonnage of coal refuse (defined below) that was deposited from the Sewell Mine Nos. 1 and 4 and deposited on surrounding properties. Additionally, I have personal knowledge regarding certain real property located in Nicholas County, West Virginia, otherwise known as the "R707 Property" and currently owned by Edmund C. Scarborough, as well as my own properties in this same area. Coal refuse (also referred to in the coal mining industry and hereafter as "Gob Piles") is the byproduct of prior (and often early/primitive) coal mining operations. Over the last century or more, such coal refuse, including valuable coal which was then deemed uneconomical to extract, was placed in pits and valleys such as the R-707 Property. The coal refuse contains significant amounts of coal which were not removed by the processes then employed and contains other non-coal materials such as rock, shale, slurry and clay. With today's technology, and factoring the recent spikes in worldwide coal prices, the remaining coal in many coal refuse sites, including my own, can be readily and economically extracted. By deed dated October 31, 2007, my wife, Melissa Mullens, and I, who together owned the R707 Property in fee simple, conveyed all of our right, title, and interest to the surface of the R707 Property to Mr. Scarborough. This deed is of record in Deed Book 444, at pages 427-429, in the records of the County Clerk of Nicholas County, West Virginia. A copy of this deed is attached hereto as Exhibit
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6. 7. Included with the sale of the R707 Property to Mr. Scarborough were our interests in and to any and all Gob Piles located on the R707 Property. Although I am not an attorney, it is my understanding, based on my experience, that Gob Piles, which by definition are located on the surface of land, and other
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AR711
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above-ground stockpiles of mined coal are tangible personal property and not "mineral rights." In the coal industry, the latter term (Le., "mineral rights") is applied to the intangible right to mine minerals that may exist under the ground.
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Therefore, Mr. Scarborough, who owns the surface rights to the R707 Property, owns outright any and all Gob Piles on the R707 Property, and has all rights associated with the ownership thereof, including but not limited to the rights to process and/or sell the Gob Piles and coal contained within. The fact that another entity may be performing reclamation activities on or near the R707 Property does not affect Mr. Scarborough's ownership of the Gob Piles. My wife and I obtained title to the R707 Property through a bankruptcy auction whereby certain assets owned by our predecessor in interest (Le., the prior owner, the Lady H Coal Company), including the R707 Property, were sold. This acquisition was evidenced by a deed dated November 15, 1996, at Deed Book 374, at pages 680-710, in the records of the County Clerk of Nicholas County, West Virginia, and attached hereto as Exhibit B. When we acquired the R707 Property from the Lady H Coal Company, we also acquired all right title and interest to the Gob Piles located on the property. To my knowledge, and after review of our deed from the Lady H Coal Company and the other deeds in the chain of title to the R707 Property, no deed in that chain makes any kind of exception or reservation of ownership with respect to the Gob Piles located on the property. To my knowledge, the only exceptions or reservations of ownership in documents comprising the chain of title to the R707 Property involve subsurface mining rights or "mineral rights". My review of the title documents to the R707 Property validates my understanding all along that, upon purchase of the R707 Property from the Lady H Coal Company, my wife and I owned the Gob Piles at issue outright and had the right to, and did thereafter, sell and transfer all ownership rights to Gob Piles to Mr. Scarborough in the October 31,2007, deed. Lady H Coal Company's predecessor in interest, New Gauley Coal Corporation, released any right or claim it may have had in the Gob Piles. This release was memorialized by a letter from New Gauley Coal Corporation, signed by George E. Angus, Vice President and Regional Manager. The New Gauley letter is attached hereto as Exhibit C. Based upon my knowledge and extensive experience in the coal industry, and as a recent past owner of the R707 Property, I can state with reasonable certainty that there are approximately 10-13 million tons of coal refuse, or Gob Piles, located on the R707 Property, and that that approximate amount of coal refuse was present at the time of the transfer of ownership to Mr. Scarborough. To my 2
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knowledge, it is present today. 15. It is also my opinion that these Gob Piles have substantial value that can be realized by the reprocessing of the coal contained within. Based on my experience, such reprocessing (i.e., processing of the Gob Pile to extract the coal contained within) can be economically performed even considering processing costs, permit fees, transportation and all other costs. In my experience, the worldwide demand for and value of coal and of Gob Piles such as those on the R707 Property has increased significantly in the last few years. This fact, coupled with improvements in the technology related to processing the Gob Piles leading to a reduction in processing costs, means that the profit which can be made after processing the Gob Piles is significant and increasing. Although Gob Piles have substantial value relative to and based on the coal that may be processed from the Gob Piles, the Gob Piles in and of themselves have substantial value prior to processing. Gob Piles can be sold to coal waste processors "as is" by an owner of a Gob Pile without any processing by the owner of the Gob Pile. Of course, processing of the Gob Pile prior to sale allows the owner to obtain a higher price for this asset. Gob Piles, either in an "as is" condition or after processing to extract the coal contained within are "readily marketable assets." There are, in my experience, many ready and willing buyers for either Gob Piles or the coal obtained therefrom. In 2006, Gauley Eagle Holdings, Inc. expressed an interest in processing my coal refuse that was stockpiled on other nearby properties I own which also originated from sewell Mine Nos. 1 and 4. Gauley Eagle arranged through me to have tests conducted through independent testing companies on this stockpile in 2006 and 2008 to determine the coal content. The coal refuse I own contains significant amounts of relatively high quality coal. I have been advised that this coal is high quality Met Coal with 12,000 BTUs and with less than 14 % ash. The value of the coal is determined from this information based on spot prices of coal meeting that description. I have been informed by experts that the value of the coal I own significantly exceeds the value of all known processing, transportation and transaction costs. Based on the source of the coal refuse and my knowledge of the coal that was extracted when I was employed at Sewell Coal Company, I believe that the R 707 Property has approximately the same percentage of coal that was identified in my stockpile.
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I know of a number of these processors who have expressed an interest in my stockpiles, including the R707 Property before the same was sold to Mr. Scarborough, over the years from West Virginia and other states. Although a permit is necessary to transport coal refuse from a site (not a reclamation permit), and other permits may be necessary to surveyor process the coal refuse on-site, in my experience such permits are not a significant impediment to the prompt and profitable processing and sale of Gob Piles.
FURTHER THE AFFIANT SAITH NAUGHT.
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Barry Mul ns
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a notary public in and for the county and state, do
STATE OF w~ ~GINIA, COUNTY OF ~oth-S , to wit:
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certify that Barry Mullens, whose name is signed to the foregoing writing bearing the 26th day of June, 2008, has this day acknowledged the same before me in my said county and state. My commission expires -",,""fl-lAA&.:l~~-=---zI''--~
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FILE COpy
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Doc 10: 002350eQ0003 Tvpe: DEE Reoorded: 10/31/2007 at 02: 34: 21 PM Fee AMt: $1,129.90 page 1 of 3 EXoi,. Tex: $1,098.90 stlllllP' 860 Nichol., County Cl.rk wanda H.ndrick.on county cl.rk
111I111111111111I
BK444 PG427-429
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SPECIAL WARRANTY DEED THIS SPECIAL WARRANTY DEED made this the 22M day of October 2007,
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by and between, Barry L. Mullens, and MeUssa J. Mullens, his wife, Granton, and,
E.C. SCARBOROUGH, Grantee; WITNESSETH:
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. That for and in consideration of the smn ofTen Dollars ($10.00), cash in hand paid, and other good and valuable' considerations, the receipt and sufficiency of all of which are hereby acknowledged, the said Grantors do hereby grant and convey, unto the Grantee with covenants of SPECIAL WARRANTY OF TITLE, all ofthat certain lot or parcel ofland in Kentucky District, Nicholas County, West Vuginia, more particularly bounded and described as follows: "Beginning at a point on the old rail road grade right-of-way and in Laurel Creek, where said right-of-way crosses Laurel.Creek; thence. in an Easterly direction with said rail road grade right-of-way and comer to Mullens tract; thence, through Mullens tract and with Plum Creek Timberlands to a point between the two said permits; thence. in a Wes~ly direction to a point between mining permit R707 and R 644 and in Laurel Creek; thence, with Laurel Creek in a Northerly direction to the point of beginning, containing 115.41 acres more or less and being the entire acreage ofpermit R 707."
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Bein~fthe same tract or parcel of real estate conveyed to Barry L.
Mullens and Weymouth L. Mullens, by deed dated the 15th day ofNovember, 1996, and of record in the office of the Clerk of the County Commission ofNicholas County, West Virginia, in Deed Book 374 at page 680.
This conveyance is expressly made and accepted upon and subject to the foUowing
covenants, which shall be binding upon and enforceable against the Grantee and the Grantee's successors and assigns, and shall be deemed covenant$ mnning with the land
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and which, by execution of this Special Warranty Deed, Grantee does acknowledge and accept: 1. The property hereby conveyed has been held for mining or mining related purposes. The Grantee agrees that no claim shall ever be asserted against the Grantor, or any company or entity presently or fonnerly associated with or operating under the Grantor, for damages, injunctive relief or regulatory relief arising directly or indirectly out ofany surface or subsurface conditions or occurrence, known or unknown, now existing or hereafter occurring or discovered and whether or not such condition or occurrence arises out of or is the result ofmining related activities on the property hereby conveyed. The Grantee assumes all risk and responsibility for any injuries or damages sustained by any person or to any property, in whole or in part, resulting from, arising out of, or in any way connected with the possession or use by Grantee ofthe property hereby conveyed. The Grantor does not warrant or represent subjacent or lateral support of the surface or subsurface ofthe property hereby conveyed. The Grantor does not warrant or represent that the property conveyed or the improvements thereon are safe, habitable or 'otherwise suitable .for the purpose for which they are intended to by used by the Grantee. or for any other purpose whatsoever. The Grantee bas inspected the property hereby conveyed and the improvements thereon and agrees to accept the same in their "as is. where is" condition, with all faults. The Grantor does not warrant or may any representations regarding the quality or quantity ofcoal located in, on or under the property hereby conveyed, including, but not limited to, any coal located in the existing impoundment on the property hereby conveyed, nor does the grantor warrant or represent the availability of the any particular rights regarding the extraction of coal from the property hereby conveyed.
This conveyance is made SUBJECT to all covenants, easements and
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reservations of record affecting the property hereby conveyed. including, but limited to. the obligations set forth in that certain deed dated November 15, 1996, by and between
THE LADY H COAL COMPANY, INC., CONSOLIDATED SEWELL, INC.· and SEWELL COAL COMPANY and BARRY L. MULLENS and WEYMOUTH L. MULLENS. of record in the Clerk ofthe County Commission office ofNicbolas County.
West Virginia in Deed Book 374. at page 680.
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TO HAVE AND TO HOLD the same, together with all appurtenances thereunto
belonging, unto the Grantee, with covenants ofspecial warranty oftitle.
DECLARATION OF CONSIDERATION VALUE
Under the penalties of fine and imprisonment as provided'by law, the undersigned Grantors do hereby declare that the total consideration paid for !:be conveyance herein made is $166,500.00.
WITNESS the following signatures and seals:
<
STATE OF WEST YmGINlA, COUNTY OF NICHOLAS, to-wit:
I.
:St :(1~Q>~o5R
, a Notary Public in and for the
aforesaid County and State, do hereby certify Berry L. Mullens and Melissa J. Mullens,
~y of October, whose names are signed to the wP.ting above, bearing date on the {fL
2007, have this day acknowledged the same before me.
This document was prepared by: Randall W. Galford Attorney at Law 1047 Arbuclde Road' Summersville, WV 266S1
State Bar ID # 1323
304-872-0496
OfPICIAL SEAL
NOTARY PUBLIC
STATlOFWI!STVlRGINIA
JUDYA.ROSE
~
· ...._M:i'l
433 ASHlEt LAIlE IIU1l1M_YlUol. WV
1I' ............. .....-May7.:I01'
_1
STATE OF WEST VIRGINIA, Nicholas
Page 3 of 3
County Commission CIIlfj(S Office 1013112001. The foregoln~together with the certificate of its aCknowledgment, was this day presented In said office and admitted to record. Clerk T t ·A~_,
~~B7 ..J .......
~.
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BOOK
374PC 680
TInS DEED made dated this ISill day of Novembcr 1996, by and between mE LADY H COAL COMPANY, INC., a corporation, CONSOLIDATED SEWELL, INC., a corporation, and SEWELL COAL COMPANY, a corporation, jointly as Grantor, and BARRY L. MULLENS and WEYMOUTH L. MULLENS, jointly as Grantee; WHEREAS, Grantor is a debtor-in-possession in proceedings now pending in the United States Bankruptcy Court for the Southern District of West Virginia who has authorized Grantor to sell the real estate owned by it free and clear of all liens and encumbrances at an auction sale held on April 17, 1996; WHEREAS, Grantee was the highest bidder at auction for the property conveyed by this instrument and the said bankruptcy court has approved and confirmed such sale of real estate free and clear of liens and encumbrances, as noted by the Order Confirming Sales Under the Motion of Debtor for Approval of Auction Sale Procedures, for Authority to Sell Real and Personal Property Free and Clear of Liens and Encumbrances, and for Assignment of Executory Contracts and Leases, entered May 10, 1996, a certified copy of which is attached hereto as Exhibit"A"; WHEREAS, the foregoing bankruptcy court order provides that a list of liens included in those liens which are released by operation of the foregoing order should be presented to the Offices of the Clerks of the County Commission of Nicholas County and Greenbrier County, West Virginia and such list has been prepared and attached hereto as Exhibit "B". NOW, THEREFORE, WITNESSETH: that for and in consideration of the sum of Twenty Thousand One Hundred Dollars ($20,100), the receipt and sufficiency of which is hereby acknowledged, Grantor hereby GRANTS and CONVEYS unto Grantee, as joint tenants with the right of survivorship, and not as tenants in common, all of Grantor's right, title and interest in and to that tract ofland in Kentucky District, Nicholas County, West Virginia, situate
-
-
---
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AR718
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along with eastern right-of-WllY of the Railroad Property and on the waters of Panther Creek and Adkins Lick, more particulllrly bounded and descri~ed as follows: Beginning lit II stake, corner to tract W-22, thence in part with tract W-22; S 19·20.35 W. 2108.90 feet passing a set stone, corner to tracts W-22 and W-24llt 10.98.90 feet, in al12108.90 feet to a point, thence; N 83-56-01 W. 254.61 feet to a point, thence; N 51-29-08 W. 738.70 feet to a point, thence; N 03-37-17 W, 870.74 feet to a point, thence; N 54-34·36 W, 816.06 feet to a point, thence; N 66-35-16 W,422.81 feet to a point, thence; N 06-15-56 W, 339.03 feet to a point, thence; N 79-00-00 W, 265.00 feet to a point, in Little Lllurel Creek Road, thence; N 16-40-00 W, 135.49 feet to a point, thence; S 79-00-00 E, 362.00 feet to a point, in Little Laurel Creek, thence along the meanders of said creek; N 00·37·52 W, 758.76 feet to a point, thence; N 19-23-37 E, 548.10 feet to a point, thence; N 14-06-30 E, 771.26 feet to a point, thence; N 04 32 W, 383.02 feet to a point, thence; N 43-26-33 E, 234.14 feet to a point, thence; N 30-13-02 E, 315.93 feet to a point, thence; N 08-27-32 E, 197.14 feet to a point, thence; N 00-00-00 E, 237.00 feet to a point, in Little Laurel Creek, thence; N 09-37-17 W, 532.49 feet to a point, in Little LIUU'eI Creek, thence; N 22-01-32 E, 711.96 feet to a point, in Little Laurel Creek, thence leaving said creek and along meanders of a mine access road; N 32-08-52 W, 298.81 feet to a point, thence; N 16-42-52 W, 358.13 feet to a point, thence; N 40-42-39 W, 510.s5 feet to a point, thence; N 5111-49 W, 1061.20 feet to a point, in said road, thence leaving the road; N 82-16-52 W, 1675.18 feet to a point, thence; N 48-55-06 W, 517.40 feet to a point, thence; N 16-41-57 W, 626.42 feet to a point, thence; N 01-21-50 E, 420.12 feet to a point, thence; N 23-04-13 E, 293.47 feet to a point, thence; N 01-23-25 E, 1030.30 feet to a point; thence; N 90-00-00 E, 210.00 feet to a point, on the south side of Gauley River, thence; S 14-3715 E, 475.39 feet to a point, thence; S 03-55-06 W, 1463.42 feet to a point, thence; S 54 - 48 E, 752.13 feet to a point, thence; N 90-00-00 E, 1250.00 feet to a point, thence; S 70-51-07 E, 381.08 feet to a point, thence; SW 36-29-50 E, 1076.02 feet to a point, thence; S 59-02-10 E, 583.10 feet to a point, thence; S 67-26-34 E, 351.92 feet to a point, thence; S 88-35-36 E, 1018.31 feet to a point, thence; S 46-49-02 E, 832.68 feel 10 a point, in said river, thence leaving the river; S 79-53-17 E, 797.39 feet to a point, near center of Panther Creek RR Bridge. thence; N 63-44-29 E, 418.15 feet to a point, in center line of B &. 0 RR, thence generally following center line of B &. 0 RR; S 88-07-20 E, 305.16 feet to a point, thence; S 55-32-21 E, 309.27 feet to a point, thence; S 34-12-02 E, 622.68 feet to a point, thence; S 60·15·18 E. 685.29 feet to a point, thence; S 4519-52 E, 611.66 feet to a point, thence; S 54-02·58 E, 1371.18 feet to a point, thence; S 28-48-39 E, 228.25 feet to a point, thence; S 02-51-45 E, 200.25 feet to a
BOOK
374PC 681.
Book :374 ,Page: 680
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BOOk
3'74PC 682
point, thence; S 14-10-41 W, 195.97 feet to a point, thence; S 12.28-05 W, 763.49 feet to a point, in center line of said B & 0 RR, thence leaving said B & 0 RR; N 90-00-00 E, 42.00 feet to a point, thence; S 18-08-08 E, 363.03 feet to a point, thence; S 17·08·25 W, 559.87 feet to a point, thence; S 67-41-38 E, 126.46 feet to a point, thence; S 19-25-30 W, 420.96 feet to a point, thence; S 36-24-59 W, 227.41 feet to a point, thence; S 07-51·58 W. 153.44 feet to a point, thence; S 24-22-55 E, 305.22 feet to a point, thence; S 52-25-40 W, 503.77 feet to a point, thence; S 05-41-18 W, 514.53 feet to a point, thence; S 90-00..()O W, 173.00 feet to a point, in Secondary Route 39/15, thence; N 09-59-06 W, 144.18 feet to a point, in Secondary Route 39/15, thence leaving said Route 39/15; N 28-21-08-W, 301.12 feet to a point, thence; N 01-15"()8 W, 183.04 feet to a point, thence; N 37-59-40 E, 336.26 feet to a point, in Secondary Route 39/15, thence with said road; N 20·30-36 E, 1021.77 feet to a point, thence; N 10-58-26 E, 1103.17 feet to a point, thence; N 01·2425 E, 285.09 feet to a point, thence; N 25-06-53 W, 353.41 feet to a point, thence; N 46-19-0 I W, 615.35 feet to a point, in Secondary Route 39/15, thence leaving said Road; S 47-51-45 W, 566.39 feet to a point, thence; N 54-12-40 W, 795.14 feet to a point, thence; N 67-40-17 W, 302.70 feet to a point, thence; N 88-05-27 W, 300.17 feet to a point, thence; S 70..()8-41 W, 191.38 feet to a point, thence; S 42-11-04 W, 431.86 feet to a point, thence; S 42 - 04 W, 431.86 feet to a point, in Brock Run, thence; N 3341-24 W, 396.61 feet to a point, in Brock Run, thence leaving said Run and along the meanders of a mine access road; N 19-01-32 E, 306.76 feet to a point, thence; S 86-39-42 W, 601.02 feet to a point, thence; N 82-0112 W, 540.23 feet to a point, thence; N 69-07·01 W, 266.51 feet to a point, thence; N 38-21-31 W, 207.87 feet to a point, thence; N n-59-54 W, 707.94 feet to a point, thence; N 80-13"()3 W, 147.14 feet to a point, in mine access road, thence leaving said access road; S 56-32-19 W, 417.14 feet to II point, thence; S 72-38-46 W, 117.34 feet to a point, thence; S 1807-10 W, 401.93 feet to a point, thence; S 49-41-34 E, 190.14 feet to a point, thence; S 22-18-22 E, 210.77 feet to a point, thence; S 42-30-38 W, 406.97 feet to a point, thence; S 21-57-38 E, 334.25 feet to a point, thence; S 89-39-42 E, 420.14 feet to a point, thence; S 31-32-25 E. 1050.30 feet to a point, in line ofB & 0 Ex.ception 2, thence; S 01-51-08 E, 125.30 feet to a point, a large Hemlock to comer B & 0 Exception 2, thence; S 64-56-06 W, 560.00 feet to a point, in a line ofB & 0 Exception 2. thence; S 85-0201 W, 676.49 feet to a point, thence; S 46-04-22 W, 377.66 feet to a point, thence;42-27-05 E, 238.53 feet to a point, thence; S 00-00-00 E, 194.00 feet to a point, thence; S 46-28-25 W, 439.97 feet to a point, thence; S 15 24-16 W, 639.99 feet to a point, thence; S 07-25-53 E. 255.14 feet to a point, thence; S 34-29-20 E, 212.19 feet to a point, thence; N 71-44-14 E, 526.52 feet to a point, thence; S 82-28-34 E, 213.84 feet to a point, thence; N 12-48-15 E, 315.85 feet to a point, thence; N 86-21-16 E,
-
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361.73 feet to a point, thence: N 47-59-37 E, 446.79 feet to a point, thence: S 59-21-19 E, 308.02 feet to a point, thence: S 22-55-51 E, 278.97 feet to a point, in line ofB & 0 Exception 2, thence: S 34-04-29 W. 675.00 feet to a point, a stake comer to Tract W-22. thence with said Tract W·22; S 81.20-23, 494.46 feet to the beginning containing 370.,33 acres less 66.56 acres for the Railroad Property, leaving 303.77 acres more or less and being a portion of the B& 0·1 Tract: and being a part of that certain tract or parcel of land heretofore conveyed to Grantor and described as Parcel No.7 in that certain Quitclaim Deed, dated November 20, 1992, by and between New Gauley Coal Corporation and Grantor, The Lady H Coal Company, Inc., and recorded in the Office of the Cleric of the County Commission ofNicholas County, in Deed Book 349, at Page 232. For purposes of this deed the "Railroad Property" is that property conveyed to Grantor and others by Valerie Post, Executrix of the Estate of Joseph W. Post. by Deed dated May 13, 1996 and of record in the office of said Clerk in Deed Book 370, at Page 494. The Grantor hereby reserves and excepts from the property conveyed by this instrument all of its right, title and interest in the Railroad Property and in the following portion of the tract described by this instrument: BEGINNING, at a nail in the center and at the West end of the Railroad bridge over Panther Creek; thence with the West right of way of the Railroad Property, SE 5,649.44 5 feet to a point on the West right of way of the Railroad Property 5; thence leaving said right of way SW 11.00 feet to a point on the East bank of Panther Creek thence with the East bank of said, creek NE 5,649.44 feet to the beginning, containing 3.10 acres more or less and including all of the land West of Panther Creek and East of the Railroad Property from the mouth of Panther Creek to a point 5,649.44 feet from the mouth of Panther Creek. The Grantor hereby further excepts and reserves for itself and any person or entity assuming reclamation related to prior mining by Grantor or its affiliates and their predecessors in interest, the right to enter upon the premises conveyed herein for the limited purpose of conducting reclamation including revegitation, water
BOOK
374rC 683
Book.: 374, page: 680
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BOO~ 374PC 684
treatment and such other reclamation activities as may be required under the terms of applicable law and any mining pennit affecting the premises. The Grantee agrees not
to interfere with . all lawful reclamation activities related to the premises and such
pennits.
The Grantee is hereby granted a right of way and easement for purpose of
ingress and egress to the property conveyed by this instrument from West Virginia State Route 39/15 across Panther Creek on the road bridges and upon the gravel road constituting the fonner railroad bed upon the Railroad Property to the extent such road extends south from the first road bridge across Panther Creek near the mouth' of Panther Creek. The conveyance herein is subject to all recorded easements, rights of way, restrictive covenants, outconveyances and all prior reservations of coal, oil, gas, timber and other mineral rights. Subject to the foregoing reservations, the Grantor hereby covenants that it will WARRANT SPECIALLY its title to the property herein conveyed and that the same is free and clear of all liens and encwnbrances. The total consideration paid for the property conveyed by this instrument is $20,100.00. WITNESS the following signatures and seals:
THE LADY H COAL COMPANY, INC.
(SEAL)
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CONSOLIDATED SEWELL, INC.
(SEAL)
SEWELL COAL COMPANY
(SEAL)
STATE OF WEST VIRGINIA,
COUNTY OF N/< I+rJ LA-~
, to-wit:
The foregoing instrument was acknowledged before me this
I
.'>
day of
,1996, by
dotf/J
(cF~f)p,-,l(",-"fl,,-,Y,--_-~
--=--_
of THE LADY H COAL COMPANY, INC., a corporation, by and on behalf of the corporation.
:=:=:~~~:J;i;~
otary Pubhc
~60002B6
,1996
~~ (])l.{;;;
.MIl't. 15 un
'1'~
we3J~1A
NICHOLAS COUNTY 190.20
e
',~ .~ "
Real E.tate
Excl.e Tax
-'
BOOk 3i'4PC 685
Book: 374 I Page: 680
AR723
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STATE OF WEST VIRGINIA.
COUNTY OF
41/ C I-k> (I't f
BOOK
, to-wit:
374rC 686
I
The foregoing instrwnent was acknowledged before me this
5'
day of
1lJrJ1J?il'1lJ tf
a ' 1996, by 10 d Ai
U /f-IJ c KIl. 'f =...:.:.:...;...;.-------
of CONSOLIDATED SEWELL, INC., a corporation, by and on behalfof the corporation.
My commission expires: _~-=:::....I::...JL_~~_----'~~=
_
NOTARY PUBUC
O!'I''''''''-SI!AL
STATE OF WEST VIRGINIA, COUNTY OF
i
LEANNE McCUTCHEON
srA.TI. OP 'o'oIE$T V1RGl",\A
ttl / OfrJrlt [
, to-wit:
vr~ElP'nIJI~Z.2l103
~.WYnA1
P.O.BOX1"
The foregoing instrwnent was acknowledged before me this j\lIJUClI7J6/C
--L.5....
day of
ofSEWELL COAL COMPANY, INC., a corporation, by and on behalf of the corporation.
Given under my hand and seal this My commission expires: ------l.-.:'
.
~~,c2,.,---.J)---L~~cm::'=L3"-------_
olary Public
--J....5- day of /l)c>Obl?1 0 G' K.
,1996.
=--f
OFI'IC.... SfAl.
STAll' OP WOIiST YJRGIIM
... D.BOX1t1
NETTlE, WY 28681
THIS INSTRUMENT WAS PREPARED BY: John A. Rollins, Attorney at Law P. O. Box 1746 Charleston, WV 25326
lEANNE McCUTCHEON
"'-""'-_'_t_
-
-
-
Book :3'14 ,Page: 680
AR724
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,
'-
,I
A TRUE COPY. Certified this
I?v'
d.y of
MQllf;avJu,ll...
Samuel L Kay, Clerk
19~
IN TIIE UNITED STATES BANKRUPTCY COURT FORU. S. Bankruptcy Court, S.D., W.Va. TIIE SOUTHERN DISTRICT OF WEST VIRGINIA Bl' QJAI
I ~"""I
$
AB
rl....k
Inre: LADY H COAL COMPANY, INC. CONSOLIDATED SEWELL, INC. SEWELL COAL CO. LEIVASY MINING CORPORAnON EASTWOOD CONSTRUCTION, INC. Debtors.
94-20449/' '
Case No.
94-20766 94·02765 94-20767 94-20710
Chapter I I, Reorganization
Procedural Consolidation
ORDER CONFIRMING SALES UNDER TIIE MOTION OF DEBTORS
FOR APPROVAL OF AUCTION AND SALE PROCEDURES,
FOR AUlHORITY TO SELL REAL AND PERSONAL PROPERTY
FREE AND CLEAR OF LIENS AND ENCUMBRANCES AND
FOR ASSIGNMENT OF EXEClITORY CONTRACTS AND I EASES
On May 6, 1996, a hearing was held to confirm real estate sales made by the Debtors at a public auction held pursuant to the terms of this Court's Interim Order Accepting Clarifications and Modifications to Motion of Debton for Approval of Auction and Sale Free and Clear of Liens and Encumbrances and for Assignment of Executory Contracts and Leases, and Providing Notice of Auction Sale and Hearing for Confirmation of Sales, entered March 27,1996 ("Interim Orderj. Thelnterim Order had approved sales of Debton, Lady H Coal Company, Inc., Consolidated Sewell, Inc., Sewell Coal Co., Leivasy Mining Corporation and Eastwood Construction, Inc. (jointly "Debtors") at public auction under the terms set forth in the Motion of Debton for Approval of Auction and Sale Procedures, for Authority to Sell Real Property, Free and Clear of Liens and Encumbrances and for Assignment of Executory Contracts and Leases {"Auction Sale Motionj. The provisions of the sale provided by the Interim Order were subject to rulings upon objections to the sale made and a hearing held on March 18, 1996. Two of the objections to the sale were filed by the UMWA 1992 Benefit Plan and the United Mine Workers of America ("objections''). The District Coun, by Order entered March 13, 1996, directed this Court to submit proposed fmdings offaet and conclusions of law relating to the objections ofthe UMWA 1992 Benefit Plan in connection with the Coal Industry Retiree Health Benefits Act of 1992. The Court issued recommended findings of fact and conclusions of law as they related to the objections under its Recommendation and Memorandum to District Court for the Southern District of West Virginia on Objections of UMWA 1992 Benefit Plan and UMWA International to Motion of Debtors for Authority to Sell Real and Personal Property Free and Clear of Liens and Encumbrances and for Assignment of Executory Contracts and Leases, entered March 29, 1996 ("Recommendation"). The District Court reviewed the Recommendation and by
BOOk
374fC 687
Book: 374 ,Page:680
AR725
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9
or
31)
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BOOK
374PC 688
Memorandwn Opinion and Order entered April 23, 1996, overruled the objections ("District Court Order''). Under the District Court Order, the objection of the UMWA 1992 Benefit Plan was overruled based upon the precedent established by the District Court decision in UMWA /991 Benefit Plan and its Trustees v. Leckie Smokeless Coal Co., No. 5:96-0092 (S.D.W.Va. Apr. 16, 1996) and the objection of the UMWA overruled based upon the adoption of the findings of the Recommendation. The District Court further found that, in the event the Leckie decision was revisited by the District Court or met with less than full agreement from the Court of Appeals, it would still overrule the objections by adoption of the Recommendation. After a ruling upon the objections, the District Court determined to leave to this Court questions ofwhether the consideration or other components of the proposed auction sales satisfied the good faith and fair and reasonable value requirements ofSectlon 363(f) of the Bankruptcy Code with the full authority to proceed with the auction sales.
After due consideration of the matters presented to the Court, the objections filed, the testimony and other evidence submitted at the May 6th hearing, and upon judicial notice ofthe matters filed in the Debtors' bankroptcy cases, the Court malees the following fmdings in accordance with 11 U.S.C. §§ 105, 363, 365 and Bankruptcy Rule 6004:
1. lbis Court has jurisdiction over the matters presented pursuant to 28 U.S.C. §§ 157(a), 1334, as core proceedings for which this Court has the authority to enter a binding and final order; 2. The Court hereby adopts and incorporates by reference the Recommended Findings ofFaet set forth in the Recommendation; 3. On April 17th, 18th and 19th, 1996, the Debtors, tluough their sales agent and auctioneer, Resource Marketing, Inc., sold all of their Equipment and Real Estate (as those terms are defined in the Interim Order) to various independent third party bidders; 4. The Equipment sold at the auction sale was sold to the parties identified in the Report of Sale of Resource Marketing, Inc., dated May 3, 1996, filed with the Court and introduced into evidence at the hearing. In connection with such sales, the Court hereby adopts and incorporates by reference its fmdings set forth in Exhibit "B" to the Recommendation; 5. At the auction, the Debtors sold their Real Estate (as identified on Exhibit "A" hereto) to Green Valley Coal Company (MOreen Valley'') and to various other purchasers (as identified in a summary form on Exhibit "B" attached to this Order). (Green Valley and the other purchasers jointly "Buyersj. Under the terms of the Interim Order and the Auction Sale Motion, and the filed Notice of Bidding and Auction Procedures ("Procedures") governing the sa/e, the sales of such Real Estate to the Buyers were subject to confirmation by the Court as provided by the Interim Order;
2
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Boot.: 314 , pil.ge:6ao
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6. Proper notice ofthe Auction Sale Motion, the Procedures, the auction and the hearing on confirmation ofthe sales ofthe auction was provided in accordance with the provisions of 11 U.S.C. § 363(b) and (1) and Bankruptcy Rules 2002 and 6004;
7. The auction, Procedures and the sales of the Debtors' Real Estate ("Propertyj at the auction to be confirmed were fair and commercially reasonable under the circumstances presented. The prices received for the Property represents a fair and
reasonable value for the assets purchased and constitutes the highest and best offers presented to the Debtors for the Property; 8. The Debtors have proved to satisfaction to the Court that the sale of the Property reflects the exercise of the Debtors' sound business judgment and is justified by the circumstances more fully set forth in the finding ofthe Recommendation and Interim Order; 9. The Buyers are completely unrelated to the Debtors and any oftheir officers, directors or stockholders; 10. The sales prices at the auction were not controlled by the agreement between potential or actual bidders, nor is there any evidence of fraud, collusion, or other defect regarding the conduct of the auction, within the meaning of II U.S.C. § 363(n); II. The Buyers arc acquiring the Property in good faith, are good faith purchasers within the meaning of II U.S.C. § 363{m) and In re Abbott's Dairies of Pennsylvania, Inc., 788 153 (3'4 Cir. 1996) and are entitled to the protections provided therein; 12. The sales of the Property to the Buyers is appropriately authorized under this Order and the Interim Order, free and clear of liens and other interests, pursuant to the provisions of II U.S.C. § 363(1), due to the fact that all holders ofliens, claims or other interests, either: (i) could be compelled, in a legal or equitable proceeding, to accept money in satisfaction oftheir lien or other interests, within the meaning of Section 363(1)(5); or (ii) hold such lien or interest subject to a bona fide dispute, within the meaning of Section 364(1)(4); or (iii) hold a lien and the price at which the Property was sold is higher than the aggregate value of all liens on the Property within the meaning of Section 363(1)(3), or is a disputed lien. Such lienholders are adequately protected in that they were allowed to bid at the auction sale and offset such bids by the amount of their claims; or BOOk 374fC 689
3
Book: 374 ,Page: 680
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)
"
BOOK
374PC 690
(iv) applicable nonbankruptcy law pencits sale of the Property free and clear of such interest pursuant to Section 363(1)(1);
13, Buyers are not assuming any ofthe Debtors' existing or future liabilities, whether joint or several, except as specifically provided \l1.jer the tenns ofsale. The sale ofthe Property to the Buyers shall be a sale free and clear of all liens and interest identified in the Auction Sale Motion or below and of all claims beld by any creditor or party in interest in this case against the Debtors, their bankruPtcy estates or the assets to be sold, existing as ofthe date ofthe sale, the closing and transfer oftitle to Buyers, or whicb arise after sucb closing and transfer but arise from, or are incurred by reason of, the Debtors' ownership and operation ofthe Property or calculated by refmnce to the Debtors or their assets or operation for a period of time prior to closing. With the exception ofthe liabilities specifically asswned by writing by Buyers under their contracts to purchase or the Procedures or by the assumption ofliabilities imposed by the assignment of a lease, executory contract or pennitto a Buyer, the Buyers shall no~ by reason ofsucb purchase or the use ofthe Property, be liable for any sucb debts or liabilities of the Debtors that may otherwise be assertible against the Buyer by becoming a successor, successor in interest or by other operation of law under the tenns ofany statute, judicial decree or other provision of law, subject to the limitations set forth berein. Claims whicb are not subject to being asswned by the Buyers, absent express asswnption in writing, include, without limitation, the existing or future duty or obligation of any of the Debtors to payor provide for:
(i) employee wages and benefits;
(ii) Workers' Compensation, occupational disease claims, retirement and health benefits, unemployment claims or temporary disability or for insurance claims or insurance premiums, including, without limitation, claims arising out of the West Virginia Workers' Compensation Act, or the Federal Coal Mine Health & Safety Act of 1969, as amended, or any other similar state or federal statute providing an obligation to maintain health or other benefits or to pay premiums to any entity or to retirees and employees, former employees or dependents ofthe foregoing or to any other person;
(iii) payments due any multi-employer pension or benefit fund, including, without limitation, withdiawalliability under Title IV of the Employee Retirement Income Security Act of 1974; (iv) claims arising out ofany labor or collective bargaining agreements to which the Debtors are or have been parties; (v) claims for personal injury or property damage arising prior to closing; (vi) fees, penalties and other assessments ofany nature incurred by any of the Debtors, including, without limitation, fmes or penalties due to any
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Book: 314 ,page: 680
AR728
Case 1:08-cv-00352-LJB
Document 30-2
Filed 07/07/2008
Page 30 of 50
outstanding notice ofvio/ation issued by any permitting or other governmental unit or claims to terminate the Debtors' interests in permits or bonds arising out of the Debtors' violation history under the permits at times or for events occurring prior to any approved transfer of the permitS to Buyers; (vii) OVerriding royalties or sales commission to any parties not specifically provided by one of the leases or executory contracts assigned to a Buyer; (viii) any obligations to pay premiums or other claims or liabilities WIder the Coal Industry Retiree Health Benefits Act of 1992;
(ix) any existing mechanics, employee or corporation liens under the laws of the State of West Virginia including those tiled under W.Va Code 38.2.31,33 and 38·2·5, 6 and including those identified at the May 6, 1996 hearing belonging to the unpaid employees of any of the Debtors, Greenbrier Spring, Inc. or to John Kizer, dIbIa Appalachian Equipment, Inc., or which may be filed before closing of the sale of the Property or thereafter, based upon labor, materials or services provided prior to the closing and transfer of the sale ofthe Property to any ofthe Buyers; and
(x) any other liabilities or claims now existing against any of the Debtors not expressly assumed by any Buyer, whether contingent or absolute, liquidated or unliquidated, perfected or unpcrfected, matured or unmatured, including any sums due by cessation ofD~btors' operations or dismissal ofemployees or termination of its arrangements or agreements with any other creditor or party in interest in their bankruptcy estates. 14. The Debtors have a right to assign the /cases and executory contracts previously assumed and to assume and assign all other contracts not previously assumed by the Buyers in connection with the sales of the Property. These assignments shall be valid and binding notwithstanding any provision in any ofthe leases or other executory contracts (including, but not limited to, such provisions described in 11 U.S.C. § 365(b)(2) and (f» that prohibit such assignment or transfer, provided, however, such assignments shall not be a waiver of any rights ofthe other parties to such instruments to require consent for any future assignments to the extent such consent is required under the existing terms of such leases or executory contracts; 15. The assignment of the leases and executory contracts to the Buyers as a pan of the sale is in accordance with 11 U.S.C. § 365. Adequate assurance of future performance of the executory contracts and unexpired leases has been provided in the case of Green Valley as its parent corporation shall provide the guarantcc of future performance of Green Valley as more particularly provided in exhibits introduced in the hearing. All monetary defaults of Wlpaid royalties and taxes due WIder any of the leases or executory contracts must be cured or promptly cured at closing;
BOOk
3'74rC 691
5
Boolt:374, page: 680
AR729
Case 1:08-cv-00352-LJB
Document 30-2
Filed 07/07/2008
Page 31 of 50
)
BOOK 374PC 692
16. The Coun has detennined that the potential for other defaults under the leases relating to mechanic's liens must be addressed by the issuance of injunctive relief, as provided by separate Order, to be entered promptly after this Order; and 17. The Debtors have to be granted authority to proceed promptly to closing due to the fact the Dei.;ors: (i) have no present funds available to maintain their mine facilities or to cure lease defaults that could led to the termination of the valuable leases to be assigned to Green Valley; (ii) the Debtors' insurance for coverage of underground mines has not been renewed as of May I, 1996 and the availability of ollier insurance after May 31$1 appears unlikely. NOW, TIlEREFORE, it is hereby ORDERED that: A. The Debtors' lIUCtion sales of the Property be and the same are hereby confirmed and the Debtors are authorized to immediately close the sale of the Property and transfer of the same to the Buyers; B. Pursuant to the provisions of 11 U.S.C. §§ 363(b) and (f), 365 and 105 and Bankruptcy Rule 6004, the Debtors are hereby authorized to sell, transfer. convey and assign the Property to the Buyers free and clear of all liens and other interests as set forth in paragraph 14 of this Order. the District Coun Order and the other findings herein or in the Recommendation; C. The Debtors are authorized and directed to effectuate the conveyance of the property to the Buyers and to execute and deliver any and all deeds, assignments. closing statements and any and all other documents necessary to close the sale of the Property and to pay from the proceeds of sale such costs of transfer and sale as m
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