By Ryan C. Wood
First and foremost Shawn Pomrenke aka Mr. Gold did not file for personal bankruptcy protection. Pomrenke Mining, LLC, a separate legal entity, filed a chapter 7 bankruptcy petition on March 19, 2019, Bankruptcy Case No. 19-00083. I like and watch the television show Bering Sea Gold on the Discovery Channel that Shawn Pomrenke, aka Mr. Gold, is a cast member of and there has been mention of these bankruptcy issues on the television show. I have watched Bering Sea Gold for many years documenting the trial and tribulations of a number of people mining for gold in the Bering Sea.
The following is the real story about Bering Sea Gold’s Shaw Pomrenke and the bankruptcy case filed by Pomrenke Mining, LLC. Time and time again I hear or read about celebrity bankruptcy cases and find there is no real reliable information. The articles are usually just click-bait smearing the name of a person in relation to a bankruptcy filing. There is nothing wrong with bankruptcy as us bankruptcy attorneys know. Bankruptcy is the law. Bankruptcy law is another amazing benefit we enjoy being born and living in the United States of America. If you do not like bankruptcy law in the United States please do what it takes to change the law and not hate on those that merely choose to follow the law to seek the protections the Bankruptcy Code provides. The recent Coronavirus and COVID-19 response is a perfect example of how circumstances control outcomes that are not in our control.
For some context and background chapter 7 of the bankruptcy code is the liquidation chapter. A bankruptcy estate is created upon the filing of the bankruptcy petition to be administered by the chapter 7 trustee assigned to the chapter 7 case. Assets of the filing party whether an individual or LLC or corporation are subject to liquidation, or sale, for the benefit of creditors of the bankruptcy filer. For individual chapter 7 bankruptcy filers there are exemptions under state and federal law to protect assets from liquidation. These exemptions vary widely.
Chapter 7 Petition Filed By Pomrenke Mining, LLC
So again, Shawn Pomrenke aka Mr. Gold did not file a personal bankruptcy petition. A separate legal entity Pomrenke Mining, LLC, that had multiple owners, filed for protection under chapter 7 of the bankruptcy code on March 19, 2019. So in theory the assets of Pomrenke Mining, LLC are now subject to sale for the benefit of the creditors of Pomrenke Mining, LLC. There is much more to come on this later in this article.
Long Story Short
I have reviewed the various court filings and here is a lay-person summary of what is going on. So at first blush there are a number of troubling issues and allegations made in relation to the chapter 7 filing of Pomrenke Mining, LLC. Primarily this chapter 7 petition filing at its core is in dispute. According to court documents the chapter 7 bankruptcy filing of Pomrenke Mining, LLC, was allegedly not legal and not properly authorized by the true owners of Pomrenke Mining, LLC. Allegedly Jon Keith Beyer of Texas manipulated the board seats of Pomrenke Mining, LLC to create a supermajority of board members to allow the board of Pomrenke Mining, LLC, to be able to vote to file a chapter 7 petition for Pomrenke Mining, LLC. On the other hand, according to Jon Keith Beyer, Shawn Pomrenke allegedly did not meet agreed upon income protections, removed $52,000 from a bank account without proper authorization, so Jon Keith Beyer had no choice but to expand the board of Pomrenke Mining, LLC to act in the best interest of all creditors of Pomrenke Mining, LLC. Jon Keith Beyer further alleges that after the 2018 mining season and Pomrenke Mining, LLC never reaching positive cash flow in three mining seasons the orderly liquidation of Pomrenke Mining, LLC was warranted.
Without getting into all of the allegations alleged given they are currently being litigated the original deal was various investors were supposed to provide $3 million to $5 million in funding to the newly created Pomrenke Mining, LLC, to buildout the barge dredge, aka “The Mega Dredge” as referred to on the Bering Sea Gold television show, and that funding did not happen as agreed to. The Pomrenke’s as part of the deal transferred various assets to Pomrenke Mining, LLC. For whatever reason the original deal went bad and here we are with the chapter 7 bankruptcy petition filing of the legal entity of Pomrenke Mining, LLC.
For some additional context at the time Pomrenke Mining, LLC, chapter 7 bankruptcy petition was filed Pomrenke Mining, LLC, was allegedly entirely solvent by every measure. Pomrenke Mining, LLC, had $3,096,494.77 in assets with only $390,646.61 in liabilities. So it begs the question why would a chapter 7 liquidation petition be filed at all for Pomrenke Mining, LLC? I am confident this question will be answered but sadly through extremely expensive litigation between the various parties involved with the chapter 7 filing of Pomrenke Mining, LLC.
Sale of Assets of Pomrenke Mining, LLC to Shawn Pomrenke
On a recent episode of Bering Sea Gold Shawn Pomrenke mentioned he had to come up with $400,000 as a payment to get the Christine Rose gold mining barge and other assets back. This is 100% accurate and here is the rest of the story. The Bankruptcy Court on June 28, 2019, sold the assets of Pomrenke Mining, LLC, free and clear of liens to Northwest Gold Diggers, LLC, owned by Shawn Pomrenke, Steven Pomrenke and Christine Pomrenke. This is a sale of the assets to an insider given the Pomrenke’s are part owners of the debtor, Pomrenke Mining, LLC, and therefore requires additional scrutiny. Of course the debtor, Pomrenke Mining, LLC, and its bankruptcy attorneys opposed the sale of the assets to the Pomrenke’s. The court in its order refers to the bad blood between the parties but finds it is irrelevant given the amount of the Pomrenke’s bid for the assets is fair and reasonable and no other parties came forward with a better offer. So without going into all of the legal mumbo jumbo does it take a genius to know who is in the best position to know the value of the assets and get the best return on these assets? Hmm nope, that would be the Pomrenke’s. The real world facts and findings by the Bankruptcy Court also found this to be true.
Generally assets in a chapter 7 bankruptcy estate are sold by public auction and more and more over the internet. You can search the internet and find websites dedicated to selling assets by trustees from bankruptcy filings. You can find some great deals if you are willing to take the risk of obtaining the item as is.
The Pomrenke’s bid of $1,036,500 was approved by the Bankruptcy Court. As part of the sale agreement the Pomrenke’s agreed to subordinate their claims against Pomrenke Mining, LLC, totaling $1,954,428.52, of which $240,000 is allegedly secured by a maritime lien. This means other claims will get paid first before their claims if there is money for the chapter 7 trustee to pay all claims of the debtor, Pomrenke Mining, LLC. The Pomrenke’s had to pay $400,000 upon the closing of the sale with the balance due the earlier of a year after closing or 30 days after demand is made by the chapter 7 trustee once the claims deadline expires and any claim objections to non-insider claims are adjudicated. When a person or company files for bankruptcy and there are assets available to creditors a claims bar date or deadline to file a proof of claim is set. All claims against the bankruptcy filer are supposed to be filed by this set date to allow for the timely and efficient liquidation of the debtor’s assets. The filed claim can be objected to though if the claim filer has not filed a timely claim, does not properly support the amount requested in the claim or the law does not support the amount of the claim alleged.
Allowable Claims
So what is left assuming the Pomrenke’s fulfill the terms of the sale? What claims are valid and allowed to be paid by the bankruptcy estate? The chapter 7 trustee is entitle to their statutory fee for administering the bankruptcy estate and the chapter 7 retained professionals are also entitle to file applications for compensation to be paid for their time representing the chapter 7 trustee. The claims objection process will continue to play out and that is what is happening right now. I will update this article when the chapter 7 trustee files their final report providing what parties received what funds.
So far it looks like the Pomrenke’s and Northwest Gold Diggers, LLC, are winning the fight objecting to various claims of other parties. We shall see.
