10.06.17 Chippewa plant-2.jpg

A former mine pit is being drained to exposed left over ore which will be processed at the Chippewa project mine in Nashwauk.

IRON RANGE — A federal district court judge has rejected Mesabi Metallics’ challenge of a bankruptcy court decision that granted land and minerals to Cleveland-Cliffs in the Nashwauk mine project.

The ruling, issued late last week, doesn’t close the door on an appeal, but says Mesabi must wait until the conclusion of a larger court battle between the company and Cliffs as part of a long-standing business feud over the former Essar Steel Minnesota project.

Cliffs had closed on the land in December 2017 after striking a deal with Glacier Park Iron Ore Properties, which pulled the leases from Mesabi earlier that year as the Nashwauk project trudged through bankruptcy. Mesabi argued the leases were protected by bankruptcy. But Delaware Bankruptcy Judge Brendan Shannon in his ruling cited an agreement between Mesabi and GPIOP that stated a leaseholder could assume leases if Mesabi’s bankruptcy emergence plan did not go effective by October of that year.

The land purchased and leased by Cliffs gives that company control of the mine pit originally planned by Essar and the mineral leases surrounding it. Cliffs has said its interests represent a large share of the ore body. About 850 tons of minerals were leased or sold to Cliffs in the deal.

Most recently, Mesabi asked the U.S. District Court in Delaware about challenging Shannon’s ruling before the larger cases are resolved, but Judge Leonard P. Stark said it did not demonstrate the need for such an appeal now.

His denial did not uphold Shannon’s original ruling, but signaled the argument made by Mesabi — that the land deal impacted its reorganization — may not stand through an appeal. Mesabi reorganized out of bankruptcy this past summer several days before Shannon’s ruling, and about seven months after Cliffs and GPIOP struck the deal.

“It is correct that issues threatening the success of a debtor’s reorganization can constitute an exceptional circumstance post-effective date,” Stark wrote in his ruling.

“Circumstance that threaten the success of a debtor’s reorganization may be sufficient to distinguish the case from the procedural norm and establish the need for immediate review. However, the court is not convinced such circumstances exist here.”

Mesabi and Cliffs did not respond to requests for comments as of press time Saturday.

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