Atna Resources Ltd files for Chapter 11 Bankruptcy Protection

Atna Resources Ltd files for Chapter 11

Recently, former top gold mining company Atna Resources Ltd. announced that it had filed for Chapter 11 bankruptcy protection. According to the Wall Street Journal, the company sought bankruptcy protection after defaulting on its $22 million prepetition loan. As a result, Atna Resources intends to hold an asset sale to restructure its debts and streamline operations.

Atna Resources falls into debt

The company sought Chapter 11 bankruptcy protection after it defaulted on the $22 million loan because it faced a lack of liquidity, down markets for gold producers and hemorrhaging cash resources. Business Den reported that in court papers, Atna Resources listed that its available cash on hand had fallen from $2.2 million in December 2014 to $200,000 by November.

Atna Resources has been hit by the collapse of gold commodity prices in the last year. In fact, Reuters reported that gold prices fell 9.5 percent in 2015, which caused the company to record losses and drops in revenue. CFO Magazine reported that the company was also adversely affected by a down market for gold mining equipment, negative investor sentiment toward gold company equities and commodities, limited capital sources for precious metals mining companies and the slow recovery of the Chinese economy.

In its bankruptcy petition, Atna Resources stated that it owed $19 million on the $22 million loan to a subsidiary of Waterton Global Resource Management of Toronto, according to Law 360. The company listed assets ranging from $10 million and $50 million, with debts between $50 million and $100 million. Its debt load has increased since 2014, when it listed $23.8 million in total debt and $33.7 million in liabilities. Atna Resources also owed $7.2 million to 20 top-ranking unsecured creditors.

Following the announcement that the company had filed for Chapter 11 bankruptcy protection, Atna Resources’ parent company also sought bankruptcy protection in Canada. According to a Market Watch report, the company’s troubles did not stop there as its common shares were suspended by the Toronto Stock Exchange on Nov. 19. Then as a result of its bankruptcy petition, the TSX announced that Atna Resources’ common stock would be delisted from the index on Dec. 29.

The company’s reorganization plan

The company will maintain its normal operations with a debtor-in-possession financing agreement. Law 360 reported that as it enters the bankruptcy period, Atna Resources plans to fund its reorganization through a $4 million lending agreement with its creditors, and use $3 million in collateral.

Atna Resources stated in its court papers that if the court does not approve of the agreement, it will seek to liquidate all of its remaining assets. With the funding, however, the company plans to sell off a portion of its core and non-essential assets to streamline its operations and reduce costs at its mines in Nevada and California.

According to court documents, Atna Resources plans to maximize the value of its remaining mines and emerge from the bankruptcy process as a viable business.

Are you a creditor in a bankruptcy?  Have you been sued by a bankrupt?  If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.