🇺🇸New Chapter 11 Bankruptcy Filing - US Magnesium LLC🇺🇸

Ira Rennert's Renco appears poised to buy magnesium producer out of bankruptcy ... again.

Sep 17, 2025

Oooooooh. We’ve got ourselves one here that should be of interest to President Trump and is definitely of interest to another billionaire.

Just four minutes drive outside of Salt Lake City’s (“SLC”) airport you’ll find the headquarters of Utah-based and billionaire Ira Rennert’s The Renco Group Inc. (“Renco”)-owned US Magnesium LLC (“USM”) which was, once upon a time out of its facility ~40 miles west of SLC, the largest producer of primary magnesium in North America.* Its focus will now turn to Delaware: on September 10, 2025, USM filed a chapter 11 bankruptcy case in that district (Judge Shannon).

Generally speaking we wouldn’t pay much mind to a producer of (non-rare) minerals (yes, plural: USM pivoted to wildly unprofitable lithium carbonate at a certain point) in the middle of bumf*ck ‘Merica but Mr. Rennert’s involvement and this bit 👇 from the First Day Declaration of Ron Thayer, President and Manager of USM, caught our attention — especially considering the heightened focus on minerals, generally, in the context of relations with both China and Ukraine:

“There is no other significant producer of primary magnesium in the United States, and primary magnesium is a critical component to United States defense contractors. The cost to build a new primary magnesium production Facility in the U.S. is estimated to exceed $1 billion.”

That. Doesn’t. Sound. Good.

If that’s true, how could things have come to this? The debtor has a lot of blame to throw around.

What f*cked the magnesium business? The debtors point fingers at (i) the closure of an Allegheny Technologies Inc. ($ATI) facility in ‘16 (a major customer) and (ii) essential equipment failures in ‘21 (and covid-related materials sourcing issues that prevented remediation). The debtor dubs the latter the “Force Majeure Event” (disputed).

What f*cked the lithium carbonate business? A whole host of things but prices have plummeted due to lack of demand — it has lost 80% of its value over the last 2.5 years — and Chinese competition has been fueling the fierce price compression.

Source: GIPHY. Someone call the President.

What f*cked the business, generally? Fights with everyone. The debtor is fighting with The State of Utah, which has been trying to terminate a “critical” mineral lease between the parties — purportedly to address decreased water levels in the Great Salt Lake, 😬 — without which the debtor cannot produce magnesium and lithium carbonate. The debtor is also fighting with the US Environmental Protection Agency (“EPA”) in connection with an old Consent Decree that the EPA alleges the USM hasn’t complied with (the site of the debtor’s facility is a Superfund site). Hold up. Someone dial up Lee Zeldin and President Trump. The federal government is helping … *checks notes* … CHIN-A … drive domestic minerals producers into bankruptcy?! No way they’ll like that!!

Due to all of these factors, operations are, per Mr. Thayer, currently “…limited to the production of dust suppressants, de-icing products, and raw sodium chloride from existing lease property material stocks, which USM sells to end users pursuant to supply agreements, and via spot sales in some instances….” Clearly this wasn’t sustainable and bankruptcy became necessary.

There’s also some debt to contend with. As of the petition date, the debtor has ~$67.1mm (exclusive of a $820k LC) in total funded debt obligations under its ‘02-originated credit agreement with Wells Fargo Bank NA ($WFC), split between ~$40.5mm due under revolving loans and ~$25.8mm due under a term loan tranche in which Renco holds a 100% participation interest.** The debtor also has ~$45.4mm due to Renco under a junior loan (secured by all of the same collateral as WFC, except owned real property). Renco was kind enough to put in an additional $2.5mm as a subordinated bridge loan with a junior lien on everything.*** Behind that is ~$37mm in trade claims, exclusive of judgment creditors including Kaiser Aluminum Warrick LLC, which recently obtained a judgment of ~$68mm (plus 9% interest) in connection with damages incurred from the Force Majeure Event and the debtor’s resultant inability to produce magnesium.

To fund the cases, WFC has stepped up with a $10mm DIP**** and the consensual use of cash collateral; it also gets a $10mm roll-up, an interest rate of 8.5%, a $200k exit fee, and liens on unencumbered assets including a SLC property, a commercial tort claim, and equity interests in something called the Skull Valley JV.

It’s not the only legacy player stepping up. The debtor indicated that Renco also wants another at-bat: it will, through an affiliate called LiMag Holdings LLC (“LiMag”),***** serve as stalking horse.

Per Thayer:

“The Stalking Horse APA contemplates, among other things, the assignment to Renco Purchaser of the Mineral Lease and Lithium MOU, and the assumption by Renco Purchaser of liabilities under the Consent Decree-conditioned upon agreement with EPA (and Utah Division of Water Quality) as to the plan for completing various projects under the Consent Decree.”

We’re certain the State of Utah and the EPA may have something to say about all of this.

The debtor obtained interim approval of its DIP and cash collateral use at a hearing held on September 12, 2025. A few days later, on September 15, 2025, the debtor filed its motion seeking approval of its bid procedures and the stalking horse arrangement. In addition to what Mr. Thayer mentioned, LiMag will be (i) credit bidding its prepetition and DIP participation interest amounts, (ii) assuming the debtor’s obligations under the Renco prepetition loan and sub loan, (iii) assuming the debtor’s obligations under the WFC loan and DIP, (iv) assuming the debtor’s pension plan obligations, and (v) paying $250k and certain cure costs.

The debtor is represented by Gellert Seitz Busenkell & Brown LLC (Michael Busenkell, Margaret Manning, Michael Van Gorder) as legal counsel, Carl Marks Advisory Group LLC as financial advisor and CRO (Ron Mayo), and SSG Advisors LLC (J. Scott Victor) as investment banker. WFC is represented by Otterbourg PC (Jonathan Helfat, Daniel Fiorillo, Matthew Breen) and Burr & Forman LLP (J. Cory Falgowski) and Renco is represented by McGuireWoods LLP (Mark Freedlander, Frank Guadagnino) and Saul Ewing LLP (Mark Minuti, Paige Topper). Kaiser Aluminum Warrick LLC is represented by McDermott Will & Schulte LLP (Darren Azman, Andrew Kratenstein, David Hurst). No surprise, the PBGC and the EPA have also made notices of appearance.

*It’s been producing magnesium out of the waters of the Great Salt Lake since ‘72! Magnesium’s uses? Alloys for auto, aero and electronics components, among other things.

**The agreement was originally put in place in connection with USM, as BuyerCo, taking the assets of predecessor Magnesium Corporation of America out of bankruptcy in ‘01. The agreement has been amended 42 times since then.

***Mr. Thayer makes a point of highlighting, early in his Declaration, that Renco hasn’t been a scumbag; he wrote:

“Over the course of the past 10 years, USM’s sole member, [Renco], and affiliated entities have provided in excess of $400 million of funding to USM, through debt, equity and credit support, which USM has used to fund capital investments, operating losses, modifications of operations and restructuring efforts. Over that same period, USM has not paid any dividends or distributions to Renco.”

****The DIP consists of two tranches of $5mm. Renco holds a 100% participation interest in the second tranche (Tranche B).

*****Real creative name guys, 🖕.

Company Professionals:

Legal: Gellert Seitz Busenkell & Brown LLC (Michael Busenkell, Margaret Manning, Michael Van Gorder)
Independent Manager: Shaun Martin
Financial Advisor/CRO: Carl Marks Advisory Group LLC (Ron Mayo)
Investment Banker: SSG Advisors LLC (J. Scott Victor)
Claims Agent: Stretto (Click here for free docket access)

Other Parties in Interest:

Prepetition Secured & DIP Lender: Wells Fargo Bank NA
- Legal: Otterbourg PC (Jonathan Helfat, Daniel Fiorillo, Matthew Breen) and Burr & Forman LLP (J. Cory Falgowski)
Sponsor, Junior Lender & Stalking Horse Purchaser: The Renco Group Inc.
- Legal: McGuireWoods LLP (Mark Freedlander, Frank Guadagnino) and Saul Ewing LLP (Mark Minuti, Paige Topper)
Kaiser Aluminum Warwick LLC
- Legal: McDermott Will & Schulte LLP (Darren Azman, Andrew Kratenstein, David Hurst)