May 16, 2007 Update

Rumford Energy, LLC

On April 13, 2007, Rumford Energy, LLC placed a notice at its business that "Due to difficult circumstances, Rumford Energy has been forced to discontinue operations." The Office of the New Hampshire Attorney General has received 468 complaints from customers of Rumford Energy to date.

On May 15, 2007, Rumford Energy LLC filed for Chapter 7 bankruptcy. The company's statement of financial affairs is not due until May 31, 2007. In its filing on May 15, the company estimated that it has between 1,000 and 5,000 creditors. Company assets are in a range between $100,000 and $1 million. Liabilities range from $1 million and $100 million. More precise numbers should be available in the May 15 filing.

The attorney for Tim Ferns, the sole equity owner in Rumford Energy, has stated that Fernses may also seek bankruptcy protection personally. As of May 15, 2007, the Fernses have not filed for bankruptcy.

Bankruptcy proceedings are begun by filing a petition in the Federal Bankruptcy Court and are decided under federal law. Such a filing creates an automatic stay, which places a hold on certain civil court proceedings. Thus, any consumer who files a lawsuit against Rumford Energy may receive a notice to the court stating that the case is subject to the automatic stay.

Now that Rumford Energy has filed a Chapter 7 petition, a trustee will be appointed automatically by the bankruptcy court to liquidate the assets of the business and, if possible distribute those assets to creditors in accordance with bankruptcy priorities. In such a proceeding, consumer creditors who paid deposits have a priority claim of up to $2,425.00, coming after administrative costs, and employee wages and benefits. This priority claim amount for consumer deposits is set by federal law. If a consumer has additional monies owed beyond the $2,425.00 priority limit, those additional monies become a non-priority claim.

Should the Fernses file a personal Chapter 7 bankruptcy, and they meet the "means test" imposed by federal law (which is designed to prevent bankruptcy fraud and abuse), the trustee will liquidate and distribute non-exempt assets in accordance with bankruptcy priorities. The Fernses will be entitled to a discharge of their liabilities unless it is successfully objected to. In addition, creditors can object to the discharge of their debts in the Fernses' personal bankruptcy case under certain circumstances, including fraud and false pretenses.

All persons or firms filing a bankruptcy petition must provide the bankruptcy court with a list of creditors. The bankruptcy court process will require that creditors receive notification and an explanation of their rights to file claims under bankruptcy law. Thus, consumers who have been affected by the closing of Rumford Energy should receive a notice from the bankruptcy court after the bankruptcy petition is filed. The notice will include information about filing a proof of claim with the bankruptcy court, and a notice of creditors' hearing.

The Attorney General will participate in the bankruptcy proceedings on behalf of New Hampshire consumers in accordance with federal bankruptcy rules. Individual consumers also have a right to participate in the cases and should evaluate that opportunity carefully, and seek advice of an attorney.

The New Hampshire Office of the Attorney General is investigating whether a crime or infraction of New Hampshire laws has occurred, regardless of any bankruptcy filing. Consumers who have been affected by the closing of Rumford Energy should file a complaint with the Consumer Protection Bureau. Consumers may file their complaints on line at doj.nh.gov/consumer/complaints.html or mail their complaints to the Consumer Protection and Antitrust Bureau at 33 Capitol Street, Concord New Hampshire, 03301. These complaints are necessary so that the Attorney General's Office has as much information as possible for its investigation, and for any pleadings that may be filed in the bankruptcy court.

Consumers may check this site for regular updates regarding this matter.