complies with the terms of the auction, including paying $8.3 million by Friday afternoon, JH Kelly will be the new owner of the Hoku Materials plant in Pocatello.
That was the decision of U.S. Bankruptcy Judge Jim Pappas on Tuesday afternoon when he granted the motion of trustee Gary Rainsdon that asked for the sale to be approved. That sale was based on a live auction hosted at the Pocatello plant late Tuesday morning.
Hoku Materials filed bankruptcy in July and a decision was made in September to put the Pocatello plant up for auction to recoup some funds for the numerous secured and unsecured creditors seeking payment.
That first auction was held online in two parts on
Oct. 23 and 24. The first day saw the opening and closing of an auction to purchase the entire facility. A piece-meal auction that consisted of more than 1,300 individual lots also began on that first day. Those lots had staggered starts and closings over the two days.
In the end, the top bid for the entire facility was
$3.7 million and the totality of the piecemeal auction was $4.8 million.
Several bidders contacted Rainsdon after the piecemeal auction and asked to bid on the total property, offering bids in excess of the piecemeal auction’s total.
Rainsdon allowed the overbid process and JH Kelly came out on top with a bid of $5.273 million. The trustee made a motion to sell the property to JH Kelly at that price in November.
But Pappas denied the motion during that hearing and ordered the sale be conducted again. On Tuesday, the judge clarified his position, saying that his concerns had nothing to do with how much the bidding process garnered or how much he felt the property was worth.
Pappas said his decision to deny the motion was about maintaining a fair process that didn’t deviate from the plan everyone was given. He said everyone needs to know what the rules for the sale are and that the rules must be followed.
“In this context, process is important,” he said. “What came to me last time was inconsistent with the order from the court.”
The auction process took less than 30 minutes, even with a roughly five-minute break taken about 10 to 15 minutes into the bidding. When a break was taken, the bidding had already reached $8.25 million, nearly
$3 million more than the top overbid price from the prior auction.
Once the auction continued, it was just a few more minutes before those involved began leaving the unfinished office building adjacent to the Hoku plant, a sign the event had concluded.
It was revealed during the hearing at the U.S. District Court in Pocatello later that afternoon that just two companies were bidding on the plant, JH Kelly and a Colorado-based group consisting of a company that one witness called Diesel Service & Supply as well as two individual investors.
Although JH Kelly officials declined to comment after the court hearing, the company did send out a release announcing the purchase late Tuesday.
JH Kelly officials have told the Journal in prior stories that they would like to purchase the facility with the intention of finding a new operation that would put it to use. They reiterated that desire in Tuesday’s release.
“As for the facility’s future, we will proceed in the manner we have voiced for the last six months,” said Mason Evans, JH Kelly’s president. “We are committed to working with the City of Pocatello and the Bannock County Economic Development Commission to alleviate some of the damage caused by the failure of Hoku/Tianwei.”
JH Kelly is not only the new owner of the facility but is a secured creditor in the bankruptcy action. They are owed more than $25 million for construction services provided.