3 Geneva creditors to get $$

A bankruptcy judge Thursday approved the distribution of $114 million to three creditors owed money by defunct Geneva Steel LLC.

Since filing for bankruptcy protection in January 2002, the Vineyard-based mill has amassed $138.3 million in cash through sales of its steel-making equipment, scrap steel and water rights.

Most of that money now will be distributed Geneva's three secured creditors, whose claims have a higher priority than other creditors.

Those creditors are:

• The U.S. Emergency Steel Loan Guarantee Board, which will be paid $91.1 million.

• Albert Fried and Co., which will receive $16.1 million.

• Silver Point Capital LP, which will be paid $6.8 million.

The secured creditors collectively are owed $136.3 million, but they will be paid only $114 million — roughly 84 percent of what they are owed — due to cash reserve requirements to maintain the estate.

James Markus, the chapter 11 trustee who oversees Geneva's assets, said it was uncertain when the remaining $22.3 million balance owed to the three secured creditors would be paid.

Markus said his ongoing focus would be to maximize the value of Geneva's land holdings, which are estimated at $25 million to $60 million and are yet to be sold.

J. Thomas Beckett, an attorney for unsecured creditors, said he supported the $114 million payoff to the secured creditors.

Debt to secured creditors is accruing an annual interest rate of 10.45 percent, a loss of $23,206 a day, or $8.5 million a year.

Beckett said that's money lost to unsecured creditors, who are owed roughly $75 million.

Geneva's attorneys said it was necessary to keep $24 million in cash going forward. The company is required to retain at least $12 million in cash reserves to cover its liability in environmental cleanup efforts at the site.

In addition, substantial cash reserves are necessary for ongoing professional fees and for the trustee to continue his investigation into claims against creditors and professionals associated with Geneva.

At least one creditor in the Geneva case has charged that exorbitant attorney fees and questionable real estate transactions could cost the estate millions of dollars.

According to court documents, in one four-month period, Kaye Scholer, one of Geneva's law firms, charged Geneva more than $46,000 in so-called "non-productive" travel time, or time spent by two attorneys sitting in a taxi or on an airplane, in which no work was done. The $46,000 charge of non-productive travel time was in addition to $17,458 in plane fare expenses during the same period.

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