PUBLIC NOTICE OF SALE: Sale of Interest in $213 Million Judgment Against The Renco Group, Inc. & Ira Leon Rennert

Lee E. Buchwald, the Chapter 7 trustee of Magnesium Corporation of America and Renco Metals, Inc. (“Debtors”), announces a bankruptcy auction of an interest in certain litigation claims against The Renco Group, Inc. and Ira Leon Rennert, consisting of a fully-bonded $213 million judgment currently on appeal. The stalking horse bidder, an affiliate of litigation funder Gerchen Keller Capital, LLC, has submitted a bid of $25 million, subject to better offers which are due by August 9, 2016.

On August 2, 2001 (the “Petition Date”), Magnesium Corporation of America (“MagCorp”) and Renco Metals, Inc. (“Metals”) (MagCorp and Metals together, the “Debtors”) each filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). By order dated September 25, 2003, the Debtors’ cases were converted to cases under Chapter 7 of the Bankruptcy Code. On September 25, 2003, Lee E. Buchwald was appointed Chapter 7 trustee of the Debtors’ estates (the “Trustee” or “Seller”).On June 23, 2016, the Trustee filed a motion (the “Bidding Procedures and Sale Motion”), pursuant to Sections 105, 363 and 503 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004 and 9014 seeking entry of an order (the “Sale Procedures Order”), (a) approving the proposed auction and bidding procedures (the “Bidding Procedures”) for the sale of the Renco Litigation Interest; (b) providing the Trustee the right to designate AEM SPV, LLC (“AEM”) the stalking horse bidder (the “Stalking Horse”) for the Renco Litigation Interest and, in the event of such designation, approving bid protections for the Stalking Horse, including a break-up fee (the “Break-up Fee”) and expense reimbursement (the “Expense Reimbursement” and together with the Break-Up Fee, the “Bid Protections”); (c) approving the form and manner of the Sale Notice; and (d) scheduling a hearing (the “Sale Hearing”) to approve such sale (the “Sale”) [D.I. 710].

The “Renco Litigation Interest” consists of the right to receive the Renco Litigation Consideration from the Net Proceeds (as hereinafter defined) of Seller’s and/or the Debtors’ recoveries from the Amended Judgment, and/or any further proceedings in connection therewith, and the Cross-Appeal, and/or any further proceedings in connection therewith. The Renco Litigation Consideration means the consideration to be paid by Seller solely from Net Proceeds (as hereinafter defined) on account of the Renco Litigation Interest in an amount equal to the sum of (a) $53,750,000 plus (b) a 10% per annum investment return on the Purchase Price, accruing daily beginning on the one (1) year anniversary of the date of the Closing, and compounding annually. “Net Proceeds” consists of any cash or other consideration Seller and/or the Debtors receive in full or partial satisfaction of the Amended Judgment and the Cross-Appeal, and/or any further proceedings in connection therewith, whether through settlement, enforcement or otherwise (“Gross Recoveries”), after deducting from Gross Recoveries the sum of: (a) 3% of Gross Recoveries on account of the Seller’s chapter 7 commissions; (b) an amount equal to the sliding scale contingency fee of Kellogg Huber, Seller’s appellate counsel, up to a maximum of Two Million Dollars ($2,000,000); and (c) 41% of Gross Recoveries on account of the contingency fee of Beus Gilbert, Seller’s trial counsel.

On July 18, 2016, the Bankruptcy Court entered the Sale Procedures Order [D.I. 724]. Pursuant to the Sale Procedures Order, if the Trustee receives one or more Qualified Bids in addition to the Stalking Horse Bid, the Trustee will conduct an auction for the sale of the Renco Litigation Interest (the “Auction”), beginning on August 11, 2016 at 10:00 a.m. (prevailing Eastern Time) at the offices of Stevens & Lee, P.C., 485 Madison Avenue, 20th Floor, New York, New York 10022. Only parties that have submitted a Qualified Bid, as set forth in the Sale Procedures Order, by no later than August 9, 2016 at 5:00 p.m. (prevailing Eastern Time) (the “Bid Deadline”) may participate at the Auction. Any party that wishes to take part in this process and submit a Bid for the Renco Litigation Interest must submit its Bid prior to the Bid Deadline and in accordance with the Bidding Procedures.

The Sale Hearing will be held August 23, 2016 at 10:00 a.m. (prevailing Eastern Time), unless otherwise continued by the Trustee pursuant to terms of the Bidding Procedures. The Sale Hearing will be held before the Honorable Mary Kay Vyskocil, in the United States Bankruptcy Court for the Southern District of New York, One Bowling Green, New York, New York 10004, Room 501. The Sale Hearing may be adjourned from time to time without further notice to creditors or parties in interest other than by announcement of the adjournment in open court on the date scheduled for the Sale Hearing.

Objections, if any, to the sale, must: (a) be in writing; (b) comply with the Bankruptcy Rules and Local Bankruptcy Rules; and (c) be filed with the clerk of the United States Bankruptcy Court for the Southern District of New York, One Bowling Green, New York, New York 10004, on or before August 16, 2016 at 4:00 p.m. (prevailing Eastern Time) and be served upon: (i) counsel for the Trustee, Stevens & Lee, P.C., 485 Madison Avenue, 20th Floor, New York, New York 10022, Attn: Nicholas F. Kajon, Esq. ([email protected]); (ii) counsel for AEM, Sugar Felsenthal Grais & Hammer LLP, 30 North LaSalle Street, Suite 3000, Chicago, IL 60602, Attention: Jonathan P. Friedland, Esq. ([email protected] ), and (iii) the Office of the United States Trustee, 201 Varick Street, Room 1006, New York, New York 10014.

UNLESS AN OBJECTION IS TIMELY SERVED AND FILED IN ACCORDANCE WITH THIS NOTICE, IT MAY NOT BE CONSIDERED BY THE BANKRUPTCY COURT AND THE BANKRUPTCY COURT MAY GRANT THE RELIEF REQUESTED WITHOUT FURTHER HEARING AND NOTICE.

This Notice and the Sale Hearing is subject to the fuller terms and conditions of the Bidding Procedures and Sale Motion and the Sale Procedures Order, which shall control in the event of any conflict, and the Trustee encourages parties in interest to review such documents in their entirety. Parties interested in receiving more information regarding the sale of the Renco Litigation Interest and/or copies of any related document, including the Sale Agreement executed between the Trustee and AEM, the Bidding Procedures and Sale Motion, or the Sale Procedures Order, may make a written request to counsel for the Trustee, Stevens & Lee, P.C., 485 Madison Avenue, 20th Floor, New York, New York 10022, Attn: Nicholas F. Kajon ([email protected]). In addition, copies of the Bidding Procedures and Sale Motion, the Sale Procedures Order and this Notice (i) can be obtained for a fee from the Court’s website, www.nysb.uscourts.gov; and (ii) are on file with the Clerk of the Bankruptcy Court, One Bowling Green, New York, New York 10004.

Dated: New York, New York
July 19, 2016
STEVENS & LEE, P.C.
Attorneys for the Chapter 7 Trustee

By: s/ Nicholas F. Kajon
Nicholas F. Kajon
485 Madison Avenue, 20th Floor
New York, New York 10022
(212) 319-8500
[email protected]