A major producer of magnesium nationwide has filed for Chapter 11 bankruptcy. US Magnesium LLC filed after the state moved to terminate its Utah operating lease. The company is seeking financing to maintain operations during the bankruptcy process, a move that faces significant hurdles.
Highlights
- US Magnesium LLC has filed for Chapter 11 Bankruptcy in the Delaware Bankruptcy Court.
- The company’s lease to operate in Utah was sought to be terminated due to environmental issues.
- Utah’s Division of Forestry, Fire & State Lands has now become an active party in the bankruptcy case.
US Magnesium LLC Filed for Chapter 11 Bankruptcy
According to a report on PacerMonitor, US Magnesium LLC filed for Chapter 11 bankruptcy on September 10, 2025. The filing followed the state’s push to end the company’s lease in Utah. The company filed the standard motions to continue operations; however, the case has become more complex.
Utah’s Division of Forestry, Fire & State Lands (DFFSL) has entered the case and become an active party. It has filed an objection to the debtor’s financing motion without adequate protection. This means that it requests the financing for the company’s operations to proceed with strict adjustments. They argue that US Magnesium’s plan could harm the state’s interests.
Termination of Lease to Operate in Utah
US Magnesium is a key supplier of magnesium, a metal widely used in aerospace, automotive, and manufacturing. The company operated a facility along the Great Salt Lake, where environmental concerns later emerged. These concerns surrounding a waste pond led to its termination from operating in Utah.
Recent layoffs at the plant added to the state’s concerns. The concern is with the maintenance of the waste pond, which contains hazardous byproducts from magnesium production. Officials warned that reduced staffing could leave the waste pond inadequately monitored.
Utah’s DFFSL then stepped in and alleged that the pond is not being properly maintained. This could result in hazardous chemicals leaking into the Great Salt Lake. Officials said a breach could threaten both public health and the environment.
This dispute between the company and the state has led to the bankruptcy filing.
Utah’s Division of Forestry, Fire & State Lands Becomes an Active Party in the Case
In a regular bankruptcy proceeding, the court approves the company’s request for financing to continue operations. However, this is not the case for US Magnesium LLC, as Utah’s DFFSL has objected to the request for financing. The division has formally entered the case through its attorneys and argues that the debtor’s plan could harm the state’s interests.
The objection means the court will now consider arguments from both parties. The court may grant temporary, limited financing while the case continues. There will be more hearings, filings, and delays in this case.
The final order will require more negotiations, while the proceedings themselves will be delayed. The dispute has added new complications to the bankruptcy proceedings. Meanwhile, other creditors may also file objections, as the division’s step may act like a signal to them.
