In hours after the Mammoth Lakes Town Council voted to pursue bankruptcy protection due to the staggering $43 million MLLA debt, Sierra Wave Media contacted MLLA attorney Dan Brockett for comment. He said that the company would fight Mammoth’s bid for bankruptcy, that Mammoth is not insolvent and that the Town dealt with MLLA in repeated bad faith. Now, Town officials have responded in a statement apparently prepared by the Town Manager and Assistant Town Manager.
The Town’s statement says that “MLLA’s bad faith continues.” The statement said MLLA repeatedly refused to attend mediation before a well-respected former judge. The Town also said MLLA “once more violates its confidentiality obligations, mischaracterizes history, and defames the Town and its hard-working officials.”
MLLA attorney Brockett had said that Mammoth is not eligible for bankruptcy. “They did not negotiate in good faith,” said Brockett, “and they are not insolvent.” Brockett pointed to Mammoth’s settlement offer of $20 million six months ago which he said was made and then rescinded. The Town’s response statement says the Town did offer $23 million to MLLA last November when Town finances looked better. Mammoth officials said MLLA “rejected ‘in full’ the Town’s generous offer, instead demanding $37.5 million by April 30th.”
Brockett pointed to MLLA’s offer to the Town in March of roughly $2.7 million per year over 30 years, with payment adjustments according to the snow year. He said Mammoth never responded to that offer.
Mammoth officials said when they saw Town finances deteriorate, they withdrew their offer that MLLA had already rejected. The Town points again to the State Bankruptcy Law which requires mediation with creditors. The Town’s statement says that the law “contemplates that MLLA would sit in a room with a highly qualified mediator, the Town and all those sacrificing to maintain Town services and implement the cuts contemplated in the Plan. MLLA would not come to the mediation,” said the Town, “despite six invitations.” Brockett said “We haven’t gone to mediation because we knew it would go nowhere considering the history.” Officials have said some 16 out of 43 creditors did take part in mediation.
Mammoth officials stated that MLLA refused mediation and challenged the Town to file Chapter 9, claiming MLLA would cause the Town’s case to be dismissed and claiming both that the Town has acted in bad faith and is not insolvent. Mammoth’s statement says that the Town is plainly insolvent because it can not pay the $43 million. The statement said that amount is “more than twice the Town’s annual discretionary budget.”
Officials maintain the Town has negotiated in good faith with creditors who were willing. The statement says, “If MLLA is so certain of its position, the mediation venue would have been an ideal setting to talk with a distinguished mediator, peer creditors, and the Town.”
Hammering their point home, Mammoth officials concluded by saying, “Because MLLA steadfastly refused to participate in the mediation, the Town had no choice but to commence the Chapter 9 case, where MLLA must come and appear and articulate whatever its story is about how the Town is able to satisfy in full…” the $43 million debt.
Assistant Town Manager Marianna Marysheva-Martinez confirmed that the Town did file necessary paperwork with federal court on Tuesday to begin the bankruptcy process.