Molycorp Files for Chapter 11 Bankruptcy Protection
Posted on Friday, June 26th, 2015 at 6:28 pm
Rare-earths mining company Molycorp has filed for Chapter 11 bankruptcy protection after significant financial losses due to low demand for minerals. The mining company has settled on an agreement with their creditors by restructuring their $1.7 billion debt. Molycorp Inc. has failed to turn a profit since 2011 after China, their largest customer of rare earth minerals, disbanded restrictions on their exports. This caused the price of the rare earth minerals to decrease, leading to a steep decline in profits for the company.
By filing for Chapter 11 bankruptcy, Molycorp is strategically planning their debt in order to remain a running business. Enlisting the financial tool of bankruptcy will help them to work with their creditors and avoid further litigation.
The bankruptcy court documents reveal that Molycorp has a cash reserve of $74 million of which only $21 million is available in the United States. Their assets as a whole are valued at $2.5 billion.
Molycorp is the first rare-earths mining company to succumb to the pressure of the Chinese mining industry, however several other companies are expected to follow. The rare earths market is now $1 billion after a peak in 2010 of $17 billion.
If creditors are hassling you or your business, the chapter 11 bankruptcy lawyers at the Bradford Law Offices, PLLC can help you understand your legal and financial options. For more information or to discuss your specific situation with an experienced Raleigh bankruptcy attorney, call (919) 758-8879.