A business partner in the Red Arrow Gold Mine has filed for bankruptcy in Texas, forcing a judge to stay an eviction hearing in Colorado.
“The entire case at this point is in a holding pattern,” Colorado District Court Judge Todd Plewe said late Friday.
Based in Katy, Texas, He-Man LLC secured a $25 million commercial loan from Maximillian Investors LLC of Delaware to finance the Red Arrow gold mining operations near Mancos. He-Man LLC filed for bankruptcy on Friday, and until the bankruptcy case is disposed, owners of a building used for milling operations are left in limbo.
Located just outside of Mancos town limits on Grand Avenue, the mill-site property and warehouse is owned by William Boyd. Both buildings were leased to Craig Liukko, operator of the Red Arrow Mine.
Boyd’s attorney, John Kelly, has filed an eviction order against Luikko, but Judge Plewe stayed the complaint Friday due to the new bankruptcy proceedings.
“There is personal property that is stored in the building,” said Kelly in a courtroom teleconference. “We aren’t particularly pleased about storing that property for free.”
The property was closed in June when Colorado Division of Reclamation, Mining and Safety (DRMS) inspectors discovered the unpermitted milling operation was using mercury with no environmental protection.
Kelly said up to $200,000 of personal property is currently stored on the premises, some of which is contaminated with mercury, he added.
DRMS officials do not believe the site presents an “immediate threat to public health or safety,” according to a memo dated August 28, but Boyd said he has been blocked from accessing his property.
“I had some plans for the site, but not anymore,” he said.
The eviction hearing was rescheduled for Nov. 8.
The illegal milling was discovered after Judge Plewe ordered Red Arrow gold mine assets into receivership. On Friday, Luikko’s legal team asked the court for an injunction against the receivership. The motion was denied.
“The receiver is an arm of the court,” Judge Plewe explained. “You’re asking for an injunctive relief against the court?”
Judge Plewe suggested Luikko could file a motion to dissolve the receivership, but he said that motion might be moot at this point, citing the recent bankruptcy filing in Texas.
Last month, DRMS fined Liukko $337,167 for operating a mill without a license and five other mining violations.
EPA officials are expected to assess the site this week, and plan to meet with Mancos officials in coming weeks to review remediation efforts, the DMRS memo saod.