Creditors want trustee to replace Clarke
The lenders in an ongoing bankruptcy case are trying to replace ERP Iron Ore owner Tom Clarke with a Chapter 11 trustee.
In a filing Tuesday evening, attorneys for Minnesota Power and Glacier Park Iron Ore Properties argued that a federal bankruptcy judge should appoint a trustee to replace Clarke because of his inability to revive the former Magnetation site near Grand Rapids and pay debts he assumed with the January 2017 purchase of that site.
If the trustee, a third party, is appointed by the judge, Clarke would lose control of the business as the trustee would take over day-to-day operations.
The bankruptcy case started as a Chapter 7 petition by several creditors in May, then converted to Chapter 11 in July.
Clarke owes almost $80 million to various creditors; $4.5 million of that is owed to Minnesota Power.
The attorneys also cited an ongoing dispute over who is in control of Chippewa Capital Partners and Mesabi Metallics, Clarke's proposed taconite mine, processing center and pig-iron plant at the Nashwauk site left by Essar Steel Minnesota several years ago.
"This evidences the business community's lack of faith in his ability to shepherd a company through a restructuring proceeding, as is needed here," the attorneys wrote.
A preliminary hearing on the ERP Iron Ore bankruptcy case is scheduled for August 14 at 1:30 p.m. in St. Paul.