Case Doc 202 Filed 11/04/15 Entered 11/04/15 16:02:14 Desc Main Document Page 1 of 40

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1 Document Page 1 of 40 David E. Leta (USB #1937) Andrew V. Hardenbrook (USB # 15371) SNELL & WILMER L.L.P. 15 W. South Temple, Suite 1200 Salt Lake City, UT Telephone: (801) Facsimile: (801) dleta@swlaw.com ahardenbrook@swlaw.com Counsel for Federal Resources Corporation and Camp Bird Colorado, Inc. IN THE UNITED STATES BANKRUPTCY COURT DISTRICT OF UTAH, CENTRAL DIVISION Jointly Administered under Bankruptcy Case No (Chapter 11) In re FEDERAL RESOURCES CORPORATION and CAMP BIRD COLORADO, INC., Judge Kevin R. Anderson THIS DOCUMENT RELATES TO: Debtors. In re Federal Resources Corporation In re Camp Bird Colorado, Inc. Both Debtors DEBTORS MOTION FOR ORDER (A) APPROVING BID PROCEDURES FOR SALE OF CAMP BIRD COLORADO, INC. S MINING EQUIPMENT AND INVENTORY; (B) AUTHORIZING THE SALE OF CAMP BIRD COLORADO, INC. S MINING EQUIPMENT AND INVENTORY FREE AND CLEAR OF LIENS; AND (C) ABANDONING THE MOTION FLOW EQUIPMENT TO MOTION FLOW Pursuant to 105, 363 and 554 of the Bankruptcy Code, and Federal Rules of Bankruptcy Procedure 2002, 6004 and 6007(a) Federal Resources Corporation ( FRC ) and

2 Document Page 2 of 40 Camp Bird Colorado, Inc. ( CBCI ) (collectively, the Debtors ) move the Court for an order: (a) approving bid procedures for the sale of the CBCI s mining equipment and inventory; and (b) authorizing the sale of the CBCI s mining equipment and inventory free and clear of liens, claims, encumbrances and interests. The Debtors hereby further give notice of their intent to abandonment the estate s interest, if any, in a hydraulic pipe crimping machine, pipe crimping tool dies and a 72-hole bin (collectively, Motion Flow Equipment ), and request that the Court enter an order abandoning the Motion Flow Equipment to Motion Flow Control Products, Inc. ( Motion Flow ). I. JURISDICTION 1. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue is proper before this Court pursuant to 28 U.S.C and The Debtors commenced their respective bankruptcy cases under Chapter 11 of the Bankruptcy Code by filing voluntary petitions on December 29, 2014 (the Petition Date ). The bankruptcy cases of FRC and CBCI are being jointly administered under Bankruptcy Case No The Debtors are managing their affairs as Chapter 11 debtors-in-possession. No examiner or trustee of creditors has been appointed in this case. No unsecured creditors committee has been appointed. II. GENERAL BACKGROUND 4. FRC owns 100% of the stock of CBCI. CBCI s principal assets consist of patented gold mining claims and related land located in Ouray, Colorado ( Camp Bird Properties ), and a 100% ownership interest in Camp Bird Tunnel Mining and Transportation Company ( CTMT ), which owns deeded water rights associated with the Camp Bird Properties. CBCI also owns various items of equipment and inventory (collectively, the

3 Document Page 3 of 40 Equipment ) located at the Camp Bird mine site, a list of which is attached hereto as Exhibit The Debtors have concluded in their business judgment that a prompt sale of the Equipment is in the best interests of the Debtors bankruptcy estates and their creditors. The Equipment is not being used, is at risk of damage, destruction or theft, is being stored in a remote location, that is difficult to access during the Winter months, and is costly to insure. The Debtors have no prospects for the use of the Equipment in the foreseeable future. 6. The Debtors have negotiated a Term Sheet (the Agreement ) (a copy is attached hereto as Exhibit 2) by which the Debtors propose to sell the Equipment to Richard Ciardo, or his designee (the Purchaser ), subject to higher or better offers, on the terms and conditions set forth in the Agreement and subject to Court approval. 7. The Debtors submit this Motion seeking approval of proposed sale procedures and the proposed sale to the Purchaser, or to another purchaser willing to pay more, and seeks related relief as set forth below. III. RELIEF REQUESTED 8. The Debtors request entry of an order, substantially in the form attached hereto as Exhibit 3, approving the bidding procedures attached to the proposed order (the Bid Procedures ) for the proposed sale of the Equipment as further defined in the Agreement, but specifically excluding the Business Records and the Motion Flow Equipment as those terms are defined in the Agreement. The Debtors have reserved a hearing on Monday, November 30, 2015 at 9:30 a.m. ( Bidding Procedures Hearing ) at which the Debtors will seek Court approval of the Bid Procedures portion of this Motion. 9. The Debtors also request that, if the Bid Procedures are approved, the Court hold a hearing (the Sale Hearing ) to approve any sale of the Equipment pursuant to the Bid 1 A list of the Equipment and pictures of the Equipment are available on the Debtors website:

4 Document Page 4 of 40 Procedures, at a date and time to be determined at the Bidding Procedures Hearing, and enter an order approving the sale. 10. The Debtors request that the Court abandon the Motion Flow Equipment to Motion Flow. Pursuant to that certain Loaned Tooling Contract and Security Agreement ( Motion Flow Agreement ) dated March 6, 2013, attached hereto as Exhibit 4, the Debtors believe that Motion Flow is the owner of the Motion Flow Equipment. A. The Term Sheet Agreement 11. The Debtors negotiated the Agreement with the Purchaser. The Purchaser is not an insider of the Debtors, and he has no affiliation with the Debtors principals. 12. Under the Agreement, the Purchaser has offered to purchase the Equipment for a cash payment of $87, (the Purchase Price ) as follows: (a) $10,000 earnest money deposit, which has been remitted to and received by the Debtors, and (b) $77, to be paid in cash no later than the third business day after the Effective Date as defined in the Agreement. The Purchaser also has agreed to pay all commissions in connection with the sale, so there will be no offsets or reductions from the purchase price. 13. In the event the Effective Date does not occur on or before December 15, 2015, the earnest money deposit is fully refundable Under the terms of the Agreement, the Equipment will be sold to Purchaser free and clear of all liens, claims, interests and any and all other encumbrances. 15. Under the Agreement, the Equipment is being sold on an as is, where is basis, and the Purchaser is required to remove the Equipment (at his own expense) on or before January 1, However, in the case of adverse weather, the Debtors have agreed that the 2 The Agreement indicates that the Effective Date must occur on or before November 30, 2015 or the earnest money is fully refundable, but the Purchaser has agreed to an extension of that deadline to December 15,

5 Document Page 5 of 40 Purchaser may take up to an extra ninety (90) days to remove the Equipment from the CBCI mine site. B. The Bid Procedures 16. The Agreement represents the highest and best proposal that the Debtors have received to date for the Equipment. 17. As described above, the Debtors believe that liquidating the Equipment is the best way to maximize returns to creditors of this estate. The Debtors propose to further test the marketplace through the proposed sale and bidding process, as set forth in the Bid Procedures, to allow the Debtors estate to attempt to maximize the value received for the Equipment. A summary of the Bid Procedures is set forth herein Although the Debtors presently intends to sell the Equipment as a whole to the highest bidder, the Debtors reserve the right in the Bid Procedures to offer the Equipment for sale in other lots as the Debtors determine in the exercise of their business judgment if an alternative sale would result in the highest or otherwise best collective value for the Equipment. Purchaser has no obligation to purchase less than all the Equipment. 19. The Debtors intend to publicize and market the Equipment, to the extent practicable, in the Debtors industry, and will give notice of this Motion (including notice of the Agreement, the Bid Procedures, the deadline for objecting to the relief sought in this Motion, and the hearings set for approval of the Bid Procedures and for approval of the sale of assets) to: a. all entities reasonably known to the Debtors to have expressed an interest in a transaction with respect to the Equipment during the past twelve months, b. the Office of the United States Trustee, c. all creditors listed on the mailing matrix in this case, 3 Should any inconsistencies exist between the summary of the Bidding Procedures set forth herein and the actual Bid Procedures, the actual Bidding Procedures shall control

6 Document Page 6 of 40 d. all known persons asserting a lien, claim, encumbrance or other interest in any of the Equipment (if any), and e. all parties who have requested service under Rule For a potential buyer (each, a Potential Bidder ) to participate in the sale process, the Potential Bidder must deliver to the Debtors (a) written evidence of a commitment for financing or other evidence of ability to consummate the proposed transaction satisfactory to the Debtors in their sole discretion; and (b) an irrevocable proposal to purchase some or substantially all of the Equipment. A Qualified Bidder is a Potential Bidder that delivers these items to the Debtors. Only cash offers will be accepted. The Purchaser is a Qualified Bidder for the Equipment. To the extent a Qualified Bidder wishes to inspect the Equipment, it must provide the Debtors with an executed indemnification that indemnifies and holds the Debtors harmless for any injury or damage that may arise to said Qualified Bidder in connection with any inspection of the Equipment. 21. A Qualified Bidder that desires to make a bid shall deliver a written copy of its bid to the Debtors as follows: David E. Leta, Snell & Wilmer L.L.P., Attorneys for Federal Resources, Inc. and Camp Bird Colorado, Inc., 15 W. South Temple, Suite 1200, Salt Lake City, Utah 84101, by no later than five (5) business days before the Sale by 4:00 p.m. (Prevailing Mountain Time) (the Bid Deadline ). The Debtors may extend the Bid Deadline once or successively, but they are not obligated to do so. All bids must include the following documents (the Required Bid Documents ): a. A letter stating that the bidder s offer is irrevocable until the earlier of (i) two (2) business days after the Equipment upon which the bidder is bidding have been disposed of pursuant to the Bid Procedures; or (ii) thirty (30) days after the Sale Hearing;

7 Document Page 7 of 40 b. An executed form of asset purchase agreement in form and substance acceptable to the Debtors; c. Written evidence of a commitment for financing or other evidence of ability to consummate the proposed transaction satisfactory to the Debtors in their sole discretion; and d. Deposit of $10,000, which shall be held by the Debtors until the Court approves the sale of the Equipment. 22. After all Qualified Bids have been received, the Debtors shall conduct an auction (the Auction ) with respect to any Equipment as to which a Qualified Bid has been received. The Auction shall take place two (2) business days before the Sale Hearing at the offices of the Debtors counsel, Snell & Wilmer L.L.P., 15 W. South Temple, Suite 1200, Salt Lake City, Utah Qualified Bidders may participate in the Auction by telephone. 23. The Debtors intend to conduct the Auction by announcing the highest and best Qualified Bid received, which may be the Agreement. The Debtors will then open the Auction to competing bids for either some or substantially all of the Equipment in whatever lots the Debtors in the exercise of its business judgment deems appropriate to result in the highest or otherwise best collective value for the Equipment. The Debtors will thereafter entertain bids for the Equipment in such successive rounds as the Debtors determine to be appropriate so as to obtain the highest or otherwise best bid or combination of bids for the Equipment. The Debtors also may set opening bid amounts in each round of bidding as the Debtors determine to be appropriate. 24. The Debtors may consider waivers or assignments of claims against the Debtors estate in conjunction with any bid. The Debtors intend to inform all parties present at the Auction of their evaluation of the economic value of any waivers or assignments of claims that may be offered at the Auction

8 Document Page 8 of At the Auction, the Debtors shall (a) review each bid or bids on the basis of financial and contractual terms and the factors relevant to the sale process, including those factors affecting the speed and certainty of consummating the sale; and (b) identify the highest and otherwise best offer or group of offers for the Equipment (the Successful Bid(s) ). At the Sale Hearing, the Debtors shall present the Successful Bid(s) for approval to the Bankruptcy Court. 26. To the extent the Debtors sell, transfer or otherwise disposes of the Equipment in a transaction or a series of transactions with one or more persons other than Purchaser in any circumstance (collectively, an Alternative Transaction ), 4 the Debtors consent, subject to separate application, notice and hearing by the Purchaser, to pay Purchaser his reasonable out-ofpocket fees and expenses, including reasonable attorneys fees and expenses of any consultants, incurred in connection with the transaction contemplated by the Agreement in the aggregate (the Expense Reimbursement ) not to exceed $2, If ordered by the Court following separate application, notice and hearing by the Purchaser, the Expense Reimbursement shall be paid as an administrative expense of Debtors following the closing of an Alternative Transaction, pursuant to 503(b) of the Bankruptcy Code. 4 The Alternative Transaction must exceed the purchase price of $87, by more than $5,

9 Document Page 9 of 40 IV. SALE OF ASSETS 28. Section 363 of the Bankruptcy Code provides that a debtor, after notice and a hearing, may use, sell or lease, other than in the ordinary course of business, property of the estate. Bankruptcy Code 363(b). 29. To approve the use, sale or lease of property outside of the ordinary course of business, the Debtors must show four requirements: (1) that a sound business reason exists for the sale; (2) there has been adequate and reasonable notice to interested parties, including full disclosure of the sale terms and the Debtor s relationship with the buyer; (3) that the sale price is fair and reasonable; and (4) that the proposed buyer is proceeding in good faith. In re Med. Software Solutions, 286 B.R. 431, (Bankr. D. Utah 2002) 30. In general, bankruptcy courts often defer to a debtor s business judgment regarding the sale of estate assets, unless such decision is arbitrary and capricious. See In re Curlew Valley Assocs., 14 B.R. 506, (Bankr. D. Utah 1981) (holding that bankruptcy court would not interfere with trustee s decision, where it was a business judgment made in good faith). Courts generally will not second-guess a debtor s business decisions when those decisions involve a business judgment made in good faith, upon a reasonable basis, and within the scope of his authority under the Code. Id., at The Debtors exercised sound business judgment in connection with the proposed sale. The Debtors have concluded that a cash sale of the Equipment, with the buyer removing the same from the Camp Bird mine site, is the best means to maximize returns to creditors. A sale by auction, using the procedures as set forth in the Bid Procedures, presents the best opportunity to realize the maximum value of the estate s assets

10 Document Page 10 of The Debtors submit that this Motion and the Bid Procedures provide adequate notice to parties in interest of the proposed sale. Among other things, the Debtors propose to provide notice and sufficient time for parties in interest to submit objections and for bidders to formulate and submit competing proposals, using due diligence materials that are reasonably accessible under the circumstances. 33. The Debtors believe that the proposed sale price obtained through the Auction will represent fair value for the Equipment. The Debtors will use reasonable best efforts to publicize the Auction and the Bid Procedures. The Debtors believe that exposing the Equipment to the market in this manner will be the best indication of the true value of those assets. 34. In addition, the Debtors have engaged in good faith negotiations with Purchaser and submit that Purchaser also has negotiated in good faith to acquire the Equipment. The Debtors submit that Purchaser has proceeded in good faith and is offering to pay fair value. 35. With respect to the value requirement, the value of the Equipment is difficult to quantify, especially considering the costs associated with removing the Equipment from the Camp Bird mine site. Given that Purchaser has agreed to remove the Equipment at his own expense, the amount offered by Purchaser for the Equipment is fair. 36. Moreover, the Agreement is subject to higher and better offers, and Purchaser has not requested or received any compensation or additional bid protections from the estate for his role as stalking horse bidder, other than those disclosed herein or set forth in the Agreement. As such, the Debtors do not believe that Purchaser has engaged in any conduct that would preclude this Court from making a good faith finding at the hearing to approve this proposed sale. 37. Pursuant to Bankruptcy Code 363(f), a debtor may sell property free and clear of any lien, claim, or interest in such property, if, among other things: (1) applicable nonbankruptcy law permits sale of such property free and clear of such interest; (2) such entity consents; (3) such interest is a lien and the price at which such property is sold is greater than the

11 Document Page 11 of 40 aggregate value of all liens on such property; (4) such interest is in bona fide dispute; or (5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. 38. Because Bankruptcy Code 363(f) is drafted in the disjunctive, satisfaction of any one of the five requirements will be sufficient to permit the sale of the Equipment free and clear of lines, claims, encumbrances, pledges, mortgages, security interests, charges, options, and other interests. 39. The Debtors are informed and believe that Caldera Mineral Resources, LLC and/or Caldera Holdings, LLC (collectively, Caldera ) claim an interest in the Equipment. The Debtors dispute the validity of Caldera s claim and lien, and, before the deadline to object to this Motion, will be filing a complaint against Caldera for a judgment that, among other things, declares that Caldera has no interest in the Equipment. As such, Caldera s claims are subject to a bona fide dispute. Therefore, the requirements of 363(f) are be satisfied. 40. Accordingly, the Court should approve the proposed Bidding Procedures and authorize the Debtors to sell the Equipment free and clear of liens and encumbrances. V. ABANDONMENT OF MOTION FLOW EQUIPMENT 41. Pursuant to 554(a), a debtor may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate. 42. Pursuant to the Motion Flow Agreement, the Motion Flow Equipment remains the sole property of Motion Flow. Ex. 4. Thus, the Debtors do not appear to have any ownership interests in the Motion Flow Equipment. 43. Accordingly, the Court should enter an order abandoning the Motion Flow Equipment back to Motion Flow

12 Document Page 12 of 40 VI. CONCLUSION The Debtors respectfully request entry of orders (i) approving the Bidding Procedures in connection with the sale of the Equipment; (ii) authorizing the sale of the Equipment free and clear of liens, claims, encumbrances and interests; (iii) abandoning the Motion Flow Equipment back to Motion Flow; and (iv) granting the Debtors such other and further relief as the Court deems just and proper. DATED: November 4, SNELL & WILMER L.L.P. /s/ Andrew V. Hardenbrook David E. Leta (USB # 1937) Andrew V. Hardenbrook (USB # 15371) Counsel for Federal Resources Corporation and Camp Bird Colorado, Inc

13 Document Page 13 of 40 CERTIFICATE OF SERVICE Electronic Service (CM/ECF): I hereby certify that on November 4, 2015, I electronically filed the foregoing document with the United States Bankruptcy Court for the District of Utah using the Court s CM/ECF System. I further certify that the parties of record in this case, as identified below, are listed as registered CM/ECF users and will be served through the CM/ECF system: Christopher D. Bryan cbryan@garfieldhecht.com, rortell@garfieldhecht.com James Vincent Cameron tr Vince.Cameron@usdoj.gov, James.Gee@usdoj.gov;Lindsey.Huston@usdoj.gov;Suzanne.Verhaal@usdoj.gov David Dain David.Dain@usdoj.gov, katherine.tribbett@usdoj.gov Andrew V. Hardenbrook ahardenbrook@swlaw.com, jpollard@swlaw.com;docket_slc@swlaw.com Kristopher C. Kleiner kris.kleiner@nortonrosefulbright.com, cecil.kennedy@nortonrosefulbright.com Peter J. Kuhn tr Peter.J.Kuhn@usdoj.gov, James.Gee@usdoj.gov;Lindsey.Huston@usdoj.gov;Suzanne.Verhaal@usdoj.gov David E. Leta dleta@swlaw.com, wkalawaia@swlaw.com;btaylor@swlaw.com John B. Lyman john.lyman@usdoj.gov, Katherine.Tribbett@usdoj.gov John M. Macfarlane jmacfarlane@fabianvancott.com, aclark@fabianvancott.com Douglas J. Payne dpayne@fabianvancott.com, hmcewen@fabianvancott.com;smcnett@fabianvancott.com Daniel D. Price daniel.price2@usdoj.gov, emily.goodman@usdoj.gov United States Trustee USTPRegion19.SK.ECF@usdoj.gov Mail Service I further certify that on November 4, 2015, I caused the foregoing document to be sent by first class United States mail, postage fully prepaid, to the following at the address set forth below: Robert D. Comer Tabor Center th Street, Suite 1000 Denver, CO James P. Murphy Murphy, Armstrong & Felton 701 Millennium Tower 719 2nd Avenue Seattle, WA Susan Mae Polk Chino-Corona Rd. Corona, CA

14 Document Page 14 of 40 Timothy S. Springer 2200 Ross Avenue, Suite 3600 Dallas, TX Louis R. Strubeck 2200 Ross Avenue, Suite 3600 Dallas, TX Greg Wilkes 2200 Ross Avenue, Suite 3600 Dallas, TX James P. Murphy Murphy, Armstrong & Felton 701 Millennium Tower 719 2nd Avenue Seattle, WA Stor-N-Lock Attn: Don Butterfield 1060 North Beck Street Salt Lake City UT The Storage Place Attn: Laurel Lindsay P.O. Box 293 Bountiful UT I further certify that on November 4, 2015, I caused the foregoing document to be ed to Richard Ciardo at rciardo9@gmail.com /s/ Andrew V. Hardenbrook

15 Document Page 15 of 40 EXHIBIT 1

16 Document Page 16 of 40 CONEX BOX #1 EQUIPMENT LIST 1. Tailing samples 2. Heaters (2) 3. Propane tanks (4, including ones attached to heaters) OUTSIDE NEAR CONEX BOX #1 1. Large corrugated metal pipe (2) CONEX BOX #2 1. Acetylene tank (100 lbs) (2) 2. Propane tank (100 lbs) 3. Spools 45 tare a. 270 ft (219 lbs) b. 170 ft c. 50 ft (92 lbs) 4. Victaulic coupling 4 inch (appx 250) 5. Microwaves 2 6. Conduit (appx 100) 7. Chains for Loader (not photographed) CONEX BOX #3 1. Cab hooks (Wire Hangings) (appx 20,000) 2. Avalanche beacons (appx 10) 3. Big foot footing forms for snow shed (appx 12) 4. Misc. Victaulic fittings a. 4 in Victaulic fittings b. Butterfly valves (16) 5. Pelcor ear protection 6. Utility chain 3/8 inch (500 ft) 7. Self-rescuers (appx 17) (not photographed) 8. First aid kit (1) (not photographed) 9. Safety files, maps (not photographed) 10. Lights (30 cnt) (not photographed) 11. Nails (not photographed) 12. HDPE Welding Rod (2 inch/4 inch) (not photographed)

17 Document Page 17 of 40 SHED 1. Hydraulic hose press 1 2. Standard utility cable (100 ft) 3. Acetylene torch 4. Acetylene torch cart 5. Valve body 6. Hydraulic cylinder 7. Tabla pump 2 inch 8. Air leg 9. Laminator 10. Misc. hydraulic fittings and other parts and pieces 11. Vices 12. Misc. belts and boots 13. Simplex aluminum jack (A1022) CONEX BOX #4 1. Misc. pipe fittings, valves, & air drill parts 2. Brass valves 3. HDPE welding rod spool 4. Misc. air and water hoses (8 inch & 5 ½ inch) 5. 5 lb fire extinguishers (4) lb fire extinguishers (6) lb fire extinguishers (2) 8. Misc. Cable Rigging 9. Pneumatic hose fitting (not photographed) 10. 7/8 inch drill steel & bits 8 ft (2), 7 ft (12), 5 ft. (12), 2 ft (8) 11. Air leg (New) ton chain come along 13. Cable come along 14. Misc. mine safety equipment (ear buds/safety glasses) 15. Re-railers 16. Misc. cable rigging OUTSIDE SHOP 1. High voltage switch gear (2) 2. Misc. parts for camelback 3. Transformers (2) 4. Willison couplers 5. Misc. parts for snow shed 6. Man car 7. 20/40 ft rail (total 350 ft) 1 The Hydraulic hose press is believed to be owned by Motion Flow, and the Debtors are seeking to abandon it back to Motion Flow. The Hydraulic hose press therefore is excluded from any sale of the Equipment

18 Document Page 18 of Bolts (appx 18 x 300) 4ft and 6ft 9. Plates (appx. 11 x 1,000) turnouts (at least 2 of which are damaged) 11. Wire mesh (8 x 25 ft) inch HDPE pipe (2,000 ft) inch HDPE pipe (3,600 ft) 14. Snow shed sets (23) appx. 18 ft wide/20 ft high 15. Mine structural steel sets (portal sets) (14) 16. #5 Rebar (8,000 lbs) SHOP 1. Heaters (2) 2. 3 storage tanks with misc. lubricants 3. Flammable storage cabinet 4. 4x8 Flat car 5. 4 ton Battery locomotive with 2 spare batteries 6. 7 ton diesel locomotive 7. Willison couplers 8. Motor (50 horsepower) 9. Motor (40 horsepower) 10. Accordion vent tubing (appx. 500 ft.) 11. Air compressor (quincy and ingersoll rand) 12. Battery chargers (2) Bearcat Z1 XT GS 14. Power cable (appx. 11,500 ft) 15. CAT IT62H Front-end loader (8,233 hrs) 16. Bucket 4 ½ yard 17. Snow plow blade 12 ft 18. Fork 19. CAT D6MXL Dozer (5,330 hrs) 20. Dodge Truck 1997/98 (128,000 miles) 21. Snow Ex Sander 22. Plywood 3 ¼ inch (75 sheets)

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23 Document Page 23 of 40 EXHIBIT 3

24 Document Page 24 of 40 David E. Leta (USB #1937) Andrew V. Hardenbrook (USB #15371) SNELL & WILMER L.L.P. 15 W South Temple, Suite 1200 Salt Lake City, Utah Telephone: Facsimile: delta@swlaw.com ahardenbrook@swlaw.com Attorneys for Federal Resources Corporation and Camp Bird Colorado, Inc. IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF UTAH In re: FEDERAL RESOURCES CORPORATION and CAMP BIRD COLORADO, INC., Debtors. Jointly Administered Under Bankruptcy Case No (Chapter 11) Judge Kevin R. Anderson THIS DOCUMENT RELATES TO: In re Federal Resources Corporation In re Camp Bird Colorado, Inc. Both Debtors ORDER (A) APPROVING BID PROCEDURES FOR SALE OF CAMP BIRD COLORADO, INC. S MINING EQUIPMENT AND INVENTORY; AND (B) ABANDONING THE MOTION FLOW EQUIPMENT TO MOTION FLOW

25 Document Page 25 of 40 The matter before the Court is the Debtors Motion for Order (A) Approving Bid Procedures for Sale of Camp Bird Colorado, Inc. s Mining Equipment and Inventory; (B) Authorizing the Sale of Camp Bird Colorado, Inc. s Mining Equipment and Inventory Free and Clear of Liens; and (C) Abandoning the Motion Flow Equipment to Motion Flow ( Motion ). 1 The Motion came on for hearing before this Court on November 30, 2015 with regard to approval of the Bid Procedures and the abandonment of the Motion Flow Equipment. 2 Appearances were noted on the record at the hearing. THE COURT, having considered the Motion, having determined that appropriate notice of the Motion was provided to creditors and parties-in-interest in these cases, having heard the statements of counsel at the hearing regarding the Motion, and having determined that good cause exists for granting the relief sought through the Motion, HEREBY ORDERS AS FOLLOWS: 1. The Motion is granted in part, specifically with regard to the Court s approval of the Bid Procedures that are attached as an exhibit to this Order and to the abandonment of the Motion Flow Equipment. 2. All objections (if any) to the Motion or to any relief requested in the Motion related to the Bid Procedures that have not been withdrawn, waived, or settled, and all reservations of rights (if any) included therein are overruled on the merits. 1 Capitalized terms not otherwise defined herein shall have the same meaning as in the Motion or the Bid Procedures. 2 The remaining aspects of the Motion, other than approval of the Bid Procedures, will be addressed at a later hearing as indicated below

26 Document Page 26 of The Bid Procedures, in the form attached as Exhibit 1 hereto, are approved in all respects. 4. The Auction for the Equipment shall take place at a.m./p.m. on, 2015 at the offices of the Debtors counsel, Snell & Wilmer L.L.P., 15 W. South Temple, Suite 1200, Salt Lake City, Utah The Sale Hearing to approve the Successful Bid(s) for the Equipment shall be held before this Court a.m./p.m. on, To the extent the Debtors sell, transfer or otherwise disposes of the Equipment in a transaction or a series of transactions with one or more persons other than Purchaser in any circumstance (collectively, an Alternative Transaction ), the Purchaser may by separate application, notice and hearing seek to recover its reasonable out-of-pocket fees and expenses, including reasonable attorneys fees and expenses of any consultants, incurred in connection with the transaction contemplated by the Agreement in the aggregate (the Expense Reimbursement ) not to exceed $2,500. Any such allowed Expense Reimbursement shall be paid as an administrative expense of Debtors following the closing of an Alternative Transaction, pursuant to 503(b). 7. The Motion Flow Equipment, as that term is defined in the Motion, are hereby abandoned to Motion Flow END OF ORDER

27 Document Page 27 of 40 DESIGNATION OF PARTIES TO BE SERVED Service of the foregoing document shall be served to the parties and in the manner designated below: Electronic Service (CM/ECF) I certify that the parties of record in this case, as identified below, are registered CM/ECF users and will be served notice of entry of the foregoing Order through the CM/ECF system: Christopher D. Bryan cbryan@garfieldhecht.com, rortell@garfieldhecht.com James Vincent Cameron tr Vince.Cameron@usdoj.gov, James.Gee@usdoj.gov;Lindsey.Huston@usdoj.gov;Suzanne.Verhaal@usdoj.gov David Dain David.Dain@usdoj.gov, katherine.tribbett@usdoj.gov Andrew V. Hardenbrook ahardenbrook@swlaw.com, jpollard@swlaw.com;docket_slc@swlaw.com Kristopher C. Kleiner kris.kleiner@nortonrosefulbright.com, cecil.kennedy@nortonrosefulbright.com Peter J. Kuhn tr Peter.J.Kuhn@usdoj.gov, James.Gee@usdoj.gov;Lindsey.Huston@usdoj.gov;Suzanne.Verhaal@usdoj.gov David E. Leta dleta@swlaw.com, wkalawaia@swlaw.com;btaylor@swlaw.com John B. Lyman john.lyman@usdoj.gov, Katherine.Tribbett@usdoj.gov John M. Macfarlane jmacfarlane@fabianlaw.com, aclark@fabianlaw.com Douglas J. Payne dpayne@fabianlaw.com, hmcewen@fabianlaw.com;smcnett@fabianlaw.com Daniel D. Price daniel.price2@usdoj.gov, emily.goodman@usdoj.gov United States Trustee USTPRegion19.SK.ECF@usdoj.gov Mail Service In addition to the parties of record receiving notice through the CM/ECF system, the following parties should be served notice pursuant to Fed. R. Civ. P. 5(b): Robert D. Comer Tabor Center th Street, Suite 1000 Denver, CO James P. Murphy Murphy, Armstrong & Felton 701 Millennium Tower 719 2nd Avenue Seattle, WA

28 Document Page 28 of 40 Susan Mae Polk Chino-Corona Rd. Corona, CA Timothy S. Springer 2200 Ross Avenue, Suite 3600 Dallas, TX Louis R. Strubeck 2200 Ross Avenue, Suite 3600 Dallas, TX Greg Wilkes 2200 Ross Avenue, Suite 3600 Dallas, TX /s/ Andrew Hardenbrook

29 Document Page 29 of 40 BID PROCEDURES Set forth below are the bid procedures (the Bid Procedures ) to be employed with respect to the prospective sale(s) (the Sale(s) ) of mining equipment and inventory of Camp Bird Colorado, Inc. ( CBCI ) in connection with jointly administered cases of CBCI and Federal Resources Corporation ( FRC ) (collectively, the Debtors ), Bankruptcy Case No (the Bankruptcy Case ), pending in the United States Bankruptcy Court for the District of Utah (the Bankruptcy Court ). The Debtors will seek entry of an order from the Bankruptcy Court authorizing and approving Sale(s) of the assets to the Qualified Bidder(s) (as hereinafter defined) as the Debtors, in the exercise of their business judgment, may determine to have made the highest or otherwise best offers to purchase the Equipment (the Successful Bidder(s) ). Stalking Horse Bid The Debtors have received a stalking horse bid proposal from Richard Ciardo, or his designee (the Purchaser ) as set forth in that certain Term Sheet (the Agreement ), 3 a copy of which will be provided along with these Bid Procedures. The Purchaser has proposed to buy the mining equipment and inventory as specified in the Agreement (the Equipment ). The Equipment that Purchaser proposes to buy do not include Business Records and the Motion Flow Equipment as those terms are defined in the Agreement. Under the Agreement, Purchaser has offered to purchase the Equipment for consideration in the amount of at least $87, (the Purchase Price ) as follows: (a) $10,000 earnest money deposit, and (b) $77, to be paid no later than the third business day after the Effective Date as defined in the Motion. The Purchaser also has agreed to pay all commissions in connection with the sale, so there will be no offsets or reductions from the purchase price. In the event the Effective Date does not occur on or before November 30, 2015, the earnest money deposit is fully refundable. Reservation of Rights The Debtors reserve the right to entertain bids for the Equipment, or to sell the Equipment in other lots as the Debtors determine in the exercise of their business judgment if an alternative sale would result in the highest or otherwise best collective value for the Equipment. 3 All capitalized terms not otherwise defined herein shall have the same meaning as in the Agreement

30 Document Page 30 of 40 The Bidding Process The Debtors shall: (i) determine whether any person is a Qualified Bidder, (ii) coordinate the efforts of the Qualified Bidders in conducting their due diligence investigations of the Equipment; (iii) receive offers from Qualified Bidders; and (iv) negotiate any offers made to purchase the Equipment (collectively, the Bidding Process ). Any person who wishes to participate in the Bidding Process must be a Qualified Bidder. Neither the Debtors nor their representatives shall be obligated to furnish any information of any kind whatsoever relating to the Equipment to any person who is not a Qualified Bidder. The Debtors shall have the right to adopt such other rules for the Bidding Process which, in their sole judgment, will better promote the goals of the Bidding Process and which are not inconsistent with any of the other provisions hereof or of any order of the Bankruptcy Court. Participation Requirements Unless otherwise ordered by the Bankruptcy Court for cause shown or as otherwise determined by the Debtors in their sole discretion, to participate in the Bidding Process each person (a Potential Bidder ) must deliver (unless previously delivered) to the Debtors: i. Written evidence of a commitment for financing or other evidence of ability to consummate the proposed transaction satisfactory to the Debtors in their sole discretion; and ii. An irrevocable proposal to purchase some or substantially all of the Equipment. A Qualified Bidder is a Potential Bidder that delivers the documents described in subparagraphs (i) and (ii), whose financial information demonstrates the financial capability of the Potential Bidder to consummate the Sale, and that the Debtors determine is reasonably likely (based on availability of financing, experience and other considerations) to submit a bona fide offer and to be able to consummate the Sale if selected as the Successful Bidder. Purchaser is a Qualified Bidder. Within three (3) business days after a Potential Bidder delivers all of the materials required by subparagraphs (i) and (ii) above, the Debtors shall determine, and shall notify the Potential Bidder, whether the Potential Bidder is a Qualified Bidder. At the same time that the Debtors notify the Potential Bidder that it is a Qualified Bidder, the Debtors shall allow the Qualified Bidder to conduct due diligence with respect to the assets sought to be acquired as hereinafter provided

31 Document Page 31 of 40 Due Diligence The Debtors shall afford each Qualified Bidder reasonable due diligence access to the assets sought to be acquired. The Debtors will coordinate all reasonable requests for additional information and due diligence access from such bidders. The Debtors shall not be obligated to furnish any due diligence information after the Bid Deadline (as hereinafter defined). Neither the Debtors nor any of their representatives are obligated to furnish any information relating to the Debtors assets to any person except to a Qualified Bidder that makes an acceptable preliminary proposal. Bidders are advised to exercise their own discretion before relying on any information regarding the Debtors assets provided by anyone other than the Debtors or their representatives. To the extent a Qualified Bidder wishes to inspect the Equipment, it must provide the Debtors with an executed indemnification that indemnifies and holds the Debtors harmless for any injury or damage that may arise to said Qualified Bidder in connection with any inspection of the Equipment. Bid Deadline A Qualified Bidder that desires to make a bid shall deliver a written copy of its bid to the Debtors as follows: David E. Leta, Snell & Wilmer L.L.P., Attorneys for Federal Resources, Inc. and Camp Bird Colorado, Inc., 15 W. South Temple, Suite 1200, Salt Lake City, Utah 84101, by no later than five (5) business days before the Sale by 4:00 p.m. (Prevailing Mountain Time) (the Bid Deadline ). Counsel for the Debtors shall immediately deliver all bids received to counsel for the Purchaser. With the consent of the Purchaser, the Debtors may extend the Bid Deadline once or successively, but it is not obligated to do so. All bids must include the following documents (the Required Bid Documents ): A letter stating that the bidder s offer is irrevocable until the earlier of (i) two (2) business days after the Equipment upon which the bidder is bidding have been disposed of pursuant to the Bid Procedures; or (ii) thirty (30) days after the Sale Hearing. An executed form of asset purchase agreement in form and substance acceptable to the Debtors (the Asset Purchase Agreement ). Written evidence of a commitment for financing or other evidence of ability to consummate the proposed transaction satisfactory to the Debtors in their sole discretion. Deposit of $10,000, which shall be held by the Debtors until the Bankruptcy Court approves the sale of the Equipment. The Debtors will consider a bid only if the bid is on terms that are not conditioned on obtaining financing or on the outcome of unperformed due diligence by the bidder. A bid received from a Qualified Bidder that includes all of the

32 Document Page 32 of 40 Required Bid Documents and meets all of the above requirements is a Qualified Bid. "As Is, Where Is" The sale of any of the Equipment shall be on an as is, where is basis and without representations or warranties of any kind, nature, or description by the Debtors, their agents or the Debtors estates. All of the Debtors right, title and interest in and to the Equipment shall be sold free and clear of all pledges, liens, security interests, encumbrances, claims, charges, options and interests thereon and there against (collectively, the Interests ) in accordance with 363 of the Bankruptcy Code, with such Interests to attach to the net proceeds of the sale(s) of the assets. Each bidder shall be deemed to acknowledge and represent that it has had an opportunity to inspect and examine the assets and to conduct any and all due diligence regarding the assets prior to making its offer, that it has relied solely upon its own independent review, investigation and/or inspection of any documents and/or assets in making its bid, and that it did not rely upon any written or oral statements, representations, promises, warranties or guaranties whatsoever, whether express, implied, by operation of law or otherwise, regarding the assets, or the completeness of any information provided in connection therewith or the Auction, except as expressly stated in these Bid Procedures or, as to the Successful Bidders, the respective Asset Purchase Agreement(s). Auction After all Qualified Bids have been received, the Debtors shall conduct an auction (the Auction ) with respect to any Equipment as to which a Qualified Bid has been received. The Auction shall take place on, at a.m./p.m. (Prevailing Mountain Time) (the Bid Deadline ) at the offices of the Debtors counsel, 15 W. South Temple, Suite 1200, Salt Lake City, Utah Qualified Bidders may participate in the Auction by telephone. In particular, the Debtors may commence the Auction by entertaining bids for the Equipment or groupings of certain of the Equipment of the Debtors. The Debtors thereafter may offer the Equipment in such lots in such successive rounds as the Debtors determines to be appropriate so as to obtain the highest or otherwise best bid or combination of bids for the assets. The Debtors also may set opening bid amounts in each round of bidding as the Debtors determines to be appropriate. Purchaser has no obligation to purchase less than all the Equipment identified in the Agreement. Upon conclusion of the Auction, the Debtors shall (i) review each Qualified Bid or Bids on the basis of financial and contractual terms and the factors relevant to the sale process,

33 Document Page 33 of 40 including those factors affecting the speed and certainty of consummating the Sale, and (ii) identify the highest and otherwise best offer or group of offers for the assets (the Successful Bid(s) ). 4 At the Sale Hearing, the Debtors shall present to the Bankruptcy Court for approval the Successful Bid(s). The Debtors may adopt rules for the bidding process at the Auction that, in its judgment, will better promote the goals of the bidding process and that are not inconsistent with any of the provisions of the Bankruptcy Code, any Bankruptcy Court order, or these Bid Procedures. Acceptance of Qualified Bids The Debtors shall sell the Equipment for the highest or otherwise best Qualified Bid(s) received. The Debtors presentation to the Bankruptcy Court for approval of a particular Qualified Bid does not constitute the Debtors acceptance of the bid. The Debtors will be deemed to have accepted a bid only when the bid has been approved by the Bankruptcy Court at the Sale Hearing. Sale Hearing The Sale Hearing is presently scheduled to take place on, at a.m./p.m. before the Honorable Kevin R. Anderson at the United States Bankruptcy Court for the District of Utah, located in Courtroom 376 of the Frank E. Moss United States Courthouse, 350 South Main Street, Salt Lake City, UT The Sale Hearing may be adjourned or rescheduled without notice by an announcement of the adjourned date at the Sale Hearing. At the Sale Hearing, the Debtors shall present to the Bankruptcy Court for approval the Successful Bid(s) for the Equipment (and/or other assets of the Debtors). Following the Sale Hearing approving the Sale of the Debtors assets to a Successful Bidder(s), if such Successful Bidder(s) fails to consummate an approved sale because of a breach or failure to perform on the part of such Successful Bidder(s), the next highest or otherwise best Qualified Bid, as disclosed at the Sale Hearing, shall be deemed to be the Successful Bid and the Seller shall be authorized to effectuate such sale without further order of the Bankruptcy Court. Modifications The Debtors may: (a) determine, in its business judgment, which Qualified Bid(s), if any, is the highest or otherwise best offer; and (b) reject at any time before entry of an order of the Bankruptcy Court approving a Qualified Bid, any bid that, in the Debtor s sole discretion, is: (i) inadequate or insufficient; (ii) not in conformity with the requirements of the Bankruptcy Code, the Bid Procedures, or the terms and conditions of sale; or (iii) contrary to the best interests of the Debtor, its estate, and its creditors. At or before the Sale Hearing, the Debtors 4 Any higher or better offers must exceed the Purchaser s purchase price of $87, by at least $5,

34 Document Page 34 of 40 may impose such other terms and conditions as it may determine to be in the best interests of the Debtor s estate, its creditors and other parties in interest. Provided, however, that if no Qualified Bid is received other than the Purchaser s Agreement, the Debtors shall determine the Agreement to be the highest or otherwise best offer at the Sale Hearing

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