A speculation on FG's future.
I tend not to speculate much on iHub, I tend to post info I find. Though I do speculate a bit on Agoracom. So I will generalize a bit here.
Most chapter 11 cases stock holders get nill. Even if there is enough money to reorg, the original stock is cancelled, since that is wasted equity and they legally can.
A few differences with FG. First, the creditors are the ones that take over a BK company and cancel the common shares. After the auction the big credotors are now gone. The next biggest creditor is a combo of the Fed/State and local taxes they owe. Though the government can place liens, you can't place a lien on the only asset FG has the NOL. The next largest creditor is the company that won a court case for unpaid warants. Then the rest are CAT and some micro loans. Essentially there is no big creditor to take over.
Secondly, the only asset FG has possession of is the NOL. That takes 50% ownership. That ownership can be certain types of creditors. But unsure if the one's remaining qualify (there are sme rules) like Plat and Lakewood did. So it is possible they need some of the original shares.
Third, the Relief canyon asset. Possibly there will be some money left over to pay some debts. I'm not thinking sky-high selling price like some I have seen posted. Yes, if the RC mine sells for what it is worth, the SH will do very well. But this is a BK auction. It will be difficult to get what it is worth. But thats OK. You don't need much to reorg. I see posters mention 32 million of debt, but PACER lists 27.4M on its current cridtors list. I think 32M is from the monthly Finance report. There are some accounting practices that make up that number, so 32M may not be the face amount owed. Any way the judge, I think, will look at the creditors list. Even at a selling price of 21M FG will reorg. But the higher the amount the higher chance SH will stay and the less dilution.
Fourth, the civil law suit. Oddly this is a positive. If FG successfully reorgs, there will be a concern that a class action law suit will be soon after if the SH are left out. A newly reorg'd company may find it cheaper to keep diluted common shares around than face the law fees. Since this will be a very easy case for a hungry lawyer to initiate. All the leg work is completed in the civil suit. So very low effort to start a class action. Very costly to defend.
We will see,
-Y
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