(Read the full article on mining.com)

The US Bankruptcy Court has ruled the Kyrgyz government is in contempt of court for continuing its legal actions locally against Canada’s Centerra Gold (TSX: CG; NYSE: CCAU) subsidiary, Kumtor Gold Company (KGC), MINING.COM reported.

The Kyrgyz government has revived a slew of previously settled alleged tax and environmental complaints at the Kumtor gold mine before the seizure of the mine, the country’s largest industrial concern, in mid-May.

In the order handed down late on July 20, judge Lisa Beckerman held that the Kyrgyz Republic was in contempt of court for violating US bankruptcy rules when it took legal action against KGC in the Kyrgyz Republic earlier this month.

“I am ruling that there is a violation of the automatic stay by the Kyrgyz Republic,” she said in a 115-page transcript of KGC’s emergency motion to enforce the automatic stay of prosecution globally, previously afforded to the company by the same court.

In her ruling, judge Beckerman noted that “the proceedings that are going before the courts in the Kyrgyz Republic do appear to have an impact on the automatic stay that’s in place here and do appear to be violative of it in numerous respects.”

Beckerman said the injunction in the Kyrgyz court “infringes” on KGC’s rights to take specific actions during this Chapter 11 proceedings.

Centerra has recently also named state monopoly gold refiner and Centerra’s largest shareholder, Kyrgyzaltyn, as a respondent.

According to the amended notice of arbitration, Kyrgyzaltyn conspired with the Kyrgyz government to seize control of the mine under the guise of temporary “external management.” It appears to continue acting at the government’s behest concerning the Kumtor operation and its shareholding in Centerra, the company alleges.

Kumtor is the largest of Centerra’s three gold mines, accounting for over 50% of the company’s total output. Since the seizure late in May, Centerra’s Kyrgyz subsidiaries have filed for Chapter 11 protection. It has also sued the new external manager of the mine, alleging that he conspired to steal the asset from the company while he was a director.

Centerra said at the time, KGC and the Kumtor Operating Company were solvent, with total assets (including the Kumtor mine) above $1.1 billion and no external bank debt.