The owner of a dam in northern Lincoln County has filed for bankruptcy protection.
In the March 20 filing with the U.S. Bankruptcy Court, Pleasant Pond Mill LLC shows its liabilities far outweigh its assets.
The limited liability company owes about $350,000 in legal fees, credit card bills and back taxes, and $115,000 to Medius L3C, the company that foreclosed on the dam more than a year ago.
Its assets are listed as a stacked granite and laid fieldstone structure, and an old, broken computer.
Clary Lake Straddles the Whitefield-Jefferson town line. The dam that impounds the lake is in North Whitefield on Route 218, just north of its intersection with Route 126.
Pleasant Pond Mill has filed for a Chapter 7 bankruptcy, which means its assets will be sold and whatever that yields will be used to pay off its creditors.
Paul Kelley, identified as the dissolution manager for Pleasant Pond Mill, said the decision was triggered by overwhelming debts and an inability to find a way forward to repair the dam.
What’s more, Kelley said, whether the structure is a dam is an open question, and if it’s not, he said it’s not clear that it could legally impound water.
Kelley also said ownership of the dam will be something the federal bankruptcy trustee assigned to the case will have to untangle.
It’s unclear what effect this bankruptcy will have on proceedings to which Pleasant Pond Mill LLC is a party.
In January 2014, the state Department of Environmental Protection issued a water level order that outlined the actions that Pleasant Pond Mill was to take to repair and operate the damaged dam. Pleasant Pond Mill appealed that order to Lincoln County Superior Court two months later and sought mediation. More than a year later, mediation ended without a solution. In his report, mediator John Sheldon noted that Kelley had dissolved the limited liability company that owned the dam.
“It is now unclear whether, and how, the Order can be enforced,” Sheldon wrote.
In September 2015, the Department of Environmental Protection issued a notice of violation
The notice of violation, which names Paul Kelley, Pleasant Pond Mill LLC, Richard Smith and AquaFortis Associates LLC, spells out the violations — failing to meet the 2014 water level order, failing to submit a surveyed plan showing the normal high-water mark of Clary Lake, failing to obtain DEP approval for a final water level management plan, failing to install a lake gauge and file a report detailing the inspection results of its installation, and failing to allow the lake to rise gradually between ice-out in 2015 until Aug. 1.
In January 2016, Pleasant Pond Mill, which has challenged DEP’s jurisdiction, was dismissed as a party to its own appeal of the DEP’s water level order in Lincoln County Superior Court, as were all its independent claims. Although Kelley had sought to reinstate the limited liability company, the court’s order stated that Pleasant Pond Mill had been administratively dissolved and it lost its standing in the case. The other plaintiff in that case, Aquafortis Associates LLC remains.
While a group of Clary Lake waterfront property owners had originally petitioned the state to take action on the water level, two of those owners, Robert Rubin and Cheryl Ayer, filed suit against Paul Kelley, Richard Smith, AquaFortis Associates LLC and Pleasant Pond Mill LLC in Lincoln County Superior Court in January 2016 seeking damages for the harm they say has been done to their property by the lowered level of Clary Lake. AquaFortis Associates owns property in the vicinity of the dam.
That same month, Arthur Enos, who had sold the dam to Pleasant Pond Mill a decade ago, assigned the mortgage to another entity, Medius L3C, a low-profit limited liability company in July 2015. In January 2016, Enos declined to give any information about the transaction, and little is known about Medius LC3, which advertised a public sale of the property for the purpose of foreclosing it. Medius is a Latin word which means the middle or third finger.
Medius L3C held a public auction in January 2016 on the steps of the Lincoln County courthouse.
Fredrick Duncan, who owns lake-front property on Clary Lake, submitted a sealed envelope to the auctioneer, but in the 15 months since then, no change of ownership has been recorded at the Lincoln County Registry of Deeds.
At the time of the foreclosure, the DEP notified Medius L3C that in the event the dam changed ownership, any subsequent owners of the dam are subject to the water level order and its special conditions, which includes DEP review and approval of any transfer.
What has been filed at the Lincoln County Registry of Deeds is a waiver of foreclosure of the tax lien assessed against Pleasant Pond Mill in September 2015.
This year, as in years past, the Whitefield selectmen have declined to foreclose on the dam for its unpaid property taxes.
“It’s not a big amount,” Tony Marple, chairman of the board of selectmen, said. “We hope to be in the queue for whatever comes.”
But more than the money, town officials hope for a resolution to the dam issue so the lake level can be restored.
During all of these proceedings, the level in Clary Lake has been so low that many property owners have been unable to reach the water using their docks, and a boat landing built by the state has been rendered unusable. During last summer’s drought, grass was seen growing on the upstream side of the dam.
A meeting of the creditors has been scheduled for 9 a.m. May 1 at the Augusta Armory.
Jessica Lowell — 621-5632