NOTTINGHAM — USA Springs Inc. — the bankrupt water bottling plant that failed to ever get off the ground — may now have its assets liquidated if a judge grants a request to convert its status to Chapter 7, according to court documents.
The request for a Chapter 7 designation came from a Department of Justice trustee just days after an auction for USA Springs was rescheduled for Sept. 28.
Lawyers representing USA Springs have filed motions to withdraw from the case, claiming they have been unable to communicate with their clients.
A hearing on that request is scheduled for Aug. 7 in U.S Bankruptcy Court.
Assistant U.S. Trustee Geraldine Karonis argued that the desire for USA Springs' legal team to depart is among many reasons assets should now be liquidated under Chapter 7 proceedings to recover a host of outstanding debts.
“Without bankruptcy counsel, the debtor will be unable to move forward with the case,” she wrote. “The debtor has been in Chapter 11 for more than four years.”
Unpaid mortgages and taxes have caused USA Springs' assets to decline, making its chances of rehabilitating the business unlikely, Karonis argued in court papers.
And even USA Springs legal team says its owed mounting legal bills. Riemer & Braunstein, the Boston law firm that has represented USA Springs, is seeking to collect roughly $1.9 million in fees. Its counterparts in New Hampshire are seeking lawyer fees as well.
A bankruptcy judge first approved USA Springs for Chapter 7 status back in April 2009 — about a year after the Nottingham-based company filed for bankruptcy protection.
But lawyers for the water bottling plant won permission a month later to convert the case to Chapter 11, with the hope of settling its outstanding debts and reorganizing.
There's been five plans submitted to the court to reconsolidate under Chapter 11, but none have come to fruition, according to Karonis' motion.
USA Springs Inc. formed in 1997 to develop a commercial water bottling plant and spent $17 million but was never able to secure financing to complete the project, court documents say.
The plant also met resistance from the town and community activists concerned that such a venture would deplete the community's aquifer.
The most tangible asset USA Springs may have left is its real estate — it's estimated to be worth about $27 million, according to Karonis' motion. But even that is subject to multiple mortgages and tax liens.
jkimble@newstote.com
