Filing Alert: Searles Valley Minerals Chapter 11

Update (Jun. 15, 2026): A comprehensive case summary is now available for the Chapter 11 bankruptcy filing of Searles Valley Minerals Inc.

Searles Valley Minerals Inc. and its debtor affiliates⁽¹⁾, an Overland Park, KS-based raw materials mining and production company, filed for Chapter 11 protection on Jun. 15 in the U.S. Bankruptcy Court for the District of Delaware.

The Company attributes its distress to a multi-year erosion of profitability driven by the July 2019 Ridgecrest earthquakes and a prolonged structural downturn in the soda ash market. The twin earthquakes inflicted roughly $50 million in repair costs and lost revenue and degraded the Searles Lake brine grade, leaving extraction at approximately 50% of pre-earthquake levels and compressing EBITDA from approximately $52 million in FY2019 to $2 million in FY2020. Concurrent global soda ash oversupply—principally low-cost synthetic Chinese production, soft downstream demand in construction and glassmaking, and rising environmental compliance costs—drove soda ash net sales down from approximately $223 million in FY2023 to approximately $147 million in FY2026 and pushed those operations to a significant operating loss. The convergence produced escalating net losses of $18 million, $24 million, $27 million, and $71 million across FY2023 through FY2026, with cash burn exceeding $5 million per month by early 2026.

To stem losses, the Company mothballed soda ash production in February 2026, implementing a corresponding reduction in force of 240 employees and independent contractors—approximately 46% of its prior workforce—and halting use of the San Diego Port. SVM and KHI engaged Lazard in February 2024, and the formal marketing process commenced in August 2025; Lazard contacted over 140 parties and obtained 50 executed NDAs, but by April 2026 the Debtors concluded that an out-of-court sale was unworkable given legacy liabilities that would transfer with the business—including an estimated $76.3 million Cap-and-Reinvest compliance shortfall—and buyers' unwillingness to acquire the business outside a court-supervised process.

Accordingly, the Debtors enter Chapter 11 without a stalking horse, pursuing a value-maximizing section 363 sale on an expedited timeline targeting an August 6, 2026 bid deadline, an August 13 auction, a September 10 closing, and an October 19, 2026 Effective Date. To fund the cases, the Company has arranged a $20 million junior DIP facility from non-Debtor parent KHI—secured by junior liens on the Prepetition Secured Lender's collateral and first-priority liens on unencumbered assets—alongside a $20 million unsecured, interest-free liquidity arrangement with TATA Chemicals, tied to a soda ash supply agreement and guaranteed by Nirma, each advancing $7 million on an interim basis and $13 million upon final approval. Prepetition secured lender HSBC, owed approximately $85.5 million across a demand line and recourse receivables facility, has consented to the consensual use of cash collateral and continued receivables-facility access of up to $30 million in exchange for additional liens on previously unencumbered Petition Date collateral and superpriority administrative expense claims. Given the insider DIP and broader related-party exposure to sponsor Nirma and KHI, the Board has installed an Independent Director and Independent Committee with exclusive authority over affiliate transactions and the KHI DIP.

Searles Valley Minerals Inc. reports $100 million to $500 million in both assets and liabilities. The filing indicates that there will be funds available for distribution to unsecured creditors. The case number is 26-10966.

⁽¹⁾ Trona Railway Company LLC and Searles Domestic Water Company LLC.

Top Unsecured Claims

Key Parties

General Bankruptcy Counsel:

• Joseph O. Larkin; James J. Mazza, Jr.
• Skadden, Arps, Slate, Meagher & Flom LLP
• Email: Joseph.Larkin@skadden.com; James.Mazza@skadden.com

Bankruptcy Co-counsel:

• Laura Davis Jones
  Pachulski Stang Ziehl & Jones LLP
  Email: ljones@pszjlaw.com

Financial Advisor:

• Ankura Consulting Group, LLC

Investment Banker:

• Lazard Frères & Co. LLC

Signatories:

• Dennis Cruise – President

Claims Agent:

• Stretto, Inc.

Equity Security Holders:

• Karnavati Holdings, Inc. – 100% Equity Interest

Bondoro Insights is continuing to monitor this case and will provide further coverage as appropriate.

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