Geneva Steel gets Ch. 11 trustee
Date April 19, 2005
Grace Leong
DAILY HERALD
A bankruptcy trustee for Geneva Steel was approved by the U.S. Bankruptcy Court in Salt Lake City on Monday -- a move that ends the management of Geneva under its president and CEO Ken Johnsen.
James T. Markus, a co-founder of the Denver law firm of Block Markus Williams LLC, was selected as Chapter 11 bankruptcy trustee for Geneva Steel by the U.S. Trustee's office in Denver. Markus, a business bankruptcy specialist certified by the American Board of Bankruptcy Certification, has clients including America West Airlines and United Press International Inc.
Markus will take over the management of Geneva's bankruptcy estate from Johnsen effective Monday. The existing Geneva board will also be dissolved and its chairman, Joe Cannon will also step down.
The appointment of Markus, the first bankruptcy trustee named in the history of Geneva Steel's bankruptcy proceedings, comes on the heels of unhappiness among Geneva's unsecured creditors over an alleged lack of full disclosure by Johnsen, Geneva attorney Stephen Garcia and Cannon of their ties with two Utah County properties owned or connected to a Geneva secured creditor, Albert Fried Jr.
The two properties in question are Trellis on the Green LLC, a 44-unit luxury condominium project at 2280 N. Freedom Blvd. being built near the Riverside Country Club in Provo, and Williams Farm, 78 acres of raw ground at the southeast corner of Geneva Road and 1600 North in Orem.
In addition, Johnsen and Garcia were found by a U.S. bankruptcy court-appointed investigator to have violated rules of professional attorney conduct when they failed to disclose that they were given privileged attorney-client information by a member of the unsecured creditors. That member later resigned.
The leaked information includes an analysis of parts of Geneva's proposed Chapter 11 plan by Thomas Beckett, attorney for the Committee of Unsecured Creditors, and negotiating strategies he had recommended to them.
Markus could not be immediately reached for comment on his appointment and future plans for Geneva.
But Beckett said Markus's first order of business would include, among other things, overseeing the closure of the sale of Geneva's water rights by May 12 to the Central Utah Water Conservancy District for $88.5 million.
Other potential trustee duties also may include managing the payment of an estimated $135 million owed to Geneva's secured creditors possibly by the end of April, he said.
Beckett said the unsecured creditors, who are owed between $60 million and $80 million, requested a bankruptcy trustee to be appointed to manage the sale of Geneva's sole remaining asset -- its 1,750-acre property in Vineyard.
"All the other assets of Geneva have been sold. The only thing left is real estate. We're now talking about a real estate development project, not a steel company liquidation," Beckett said. "We want the trustee to help us identify the proper party who will develop Geneva's real estate to the benefit of the unsecured creditors."
Charles McVay, a Denver-based U.S. trustee for Colorado, Wyoming and Utah, said Markus's duties would include an investigation of the assets, liabilities and financial condition of Geneva.
Both Beckett and McVay declined to comment on whether the trustee would investigate allegations of insider dealings among Johnsen, Fried, Garcia and Cannon over Trellis on the Green and Williams Farm property.
Garcia is a partner with Johnsen in the Trellis deal, which also involves Fried, his daughter, Christina, and Cannon. Cannon and Johnsen are also selling the Williams Farm property on behalf of Fried, its owner.
"Anderson (Development) has identified about $30 million in claims that can be pursued by the bankruptcy estate against the insiders. But that's up to the trustee to determine how best to pursue the claims, if at all," Michael Hutchings, an attorney for Anderson, said.
Anderson is a competitor vying for rights to develop Geneva's property in Vineyard.
