County Discusses St. Marie Bankruptcy
St. Marie property owner Pat Kelly filed for bankruptcy earlier this year. While the process is only beginning in the courts, Marvin Bethea joined the commissioners in a discussion on what would be best bankruptcy to file – Chapter 7 or Chapter 11. The discussion took place April 23.
Bethea, a St. Marie property owner, explained that a Chapter 11 would be more beneficial to the county and St. Marie residents. He explained that a committee would be formed, appointed by a U.S. trustee. Bethea said that support from others in St. Marie was for recommending Chapter 11.
Commissioner Dave Pippin explained that the county has received many letters from St. Marie, some asking for Chapter 7. Pippin voiced concerns about Chapter 11.
County Attorney Nickolas Murnion explained that a Chapter 7 would mean a faster process to liquidate the listed assets. Murnion suggested that the Chapter 7 would be more beneficial to the county. A Chapter 11 would mean a plan would have to be provided, and it would only keep creditors from collecting on the properties listed.
Currently the properties listed are approximately $357,000 behind in taxes owed to the county. The assessed value is $233,000.
Murnion also explained that there was an issue with lack of insurance on many of the properties. He thought the lack of insurance could become an issue as a fire could destroy properties over the period of time a Chapter 11 bankruptcy would take. In addition, the county has an issue with the further delay on tax liens on the properties.
He explained to the commissioners and to Bethea that the listed properties involved would need to be looked at for possible fraudulent transfers of property. He hoped that the committee would look at the insurance issues and said that a previous bankruptcy filed was dismissed because of some issues.
Bethea argued that the Chapter 7 could be dismissed, and it would put issues at St. Marie back to where it started. He also said that a Chapter 11 would provide time to help deal with other issues.
Murnion explained that because Valley County was a shareholder, the county would be looking at its best interests in filing a Chapter 7.
Pippin advised that Murnion draft a letter of concern about filing a Chapter 11. His concerns were about leaving dilapidating properties, and a possible cleanup that would be the county’s responsibility. He expressed concern that the future could bring the raising of a mill levy to address issues in St. Marie.
Commissioner Bruce Peterson asked Murnion what the timeline might be for a Chapter 7. Murnion said an exact time period wouldn’t be given, but there were strict guidelines to be looked and it wouldn’t happen overnight. He mentioned that there hadn’t been a shareholder meeting, or at least one the county knew about in some time.
Peterson recommended a letter that would also endorse a Chapter 7, and that the commissioners might oppose a Chapter 11.
Pat Kelly after the meeting took place said that the Chapter 7 bankruptcy would mean the county could sell off all the listed properties and see what it could get. He said the affected property owners wouldn’t get anything, but that a Chapter 11 would let them move forward and keep others from taking the property.
Kelly added that they would find out in a few weeks on what the judgment might be in the bankruptcy.