McWatters bankruptcy reaches settlement

The Quebec Superior Court has approved the settlement between insolvent McWatters Mining (MWA-T) and its creditors, ending bankruptcy proceedings for the company and for the Sigma-Lamaque partnership, McWatters’s 60-40 joint venture with Soquem.

Under the terms of the settlement, approved by the creditors, proceeds from the sale of McWatters’ assets will be used to pay off secured creditors, including Quebec government agency Investissement Qubec, taxes, and wages owed the employees. Once those debts are paid, unsecured creditors will get a pro rata share of the remaining funds.

McWatters agreed in early May to sell its Sigma-Lamaque mine property to Century Mining (CMM-V) for $25.9 million. Investissement Qubec will receive $5 million from Century on closing, and half the net proceeds of the sale will be held in trust for the government agency.

Century assumes the loan at a $18.5-million balance, and as the loan is paid down, proceeds held in trust will be released for distribution to other creditors.

The other half will be distributed to cover bankruptcy expenses, taxes and similar Crown claims, salaries and additional employee claims, as well as other claims given priority by the Bankruptcy and Insolvency Act. About $741,000 is due to employees, but Crown and other claims are thought to be insignificant.

Bankruptcy trustees Raymond Chabot estimated in May that $2.9 million, or 19 on the dollar, would be available to pay unsecured creditors, leaving no distribution for shareholders.