Gov. Mark Dayton invited the mining company Cliffs Natural Resources to step over the lifeless body of Essar Steel Minnesota and take over Essar's stalled mine and taconite processing project near Nashwauk.

But it just so happens that Essar Steel Minnesota is only mostly dead.

"There's a big difference between mostly dead and all dead, " the character Miracle Max patiently explained in the classic movie "The Princess Bride." "Mostly dead is slightly alive."

The mostly dead Essar Steel Minnesota has put its Minnesota project in bankruptcy, and Essar has shown in other North American bankruptcy cases that it has a knack for remaining alive in these deals.

Essar Steel Minnesota and an affiliate, ESML Holdings, filed for bankruptcy protection earlier this month when the governor's team moved to terminate the mineral leases Essar had to mine an iron ore body considered one of the best remaining on the Iron Range.

Dayton has good reason for wanting to get rid of Essar. It has defaulted on state grants used to build infrastructure for an economic development project it can't seem to complete and has left Minnesota contractors and suppliers unpaid for their work.

Listed among the creditor claims in the bankruptcy filing is the roughly $64 million owed to the taxpayers under those economic development grants, yet as of this writing the bankruptcy filing doesn't have much additional detail in it. What's there in spades, though, is evidence that this unit of India-based Essar Global really was broke.

At the top of the list of creditors is just who one would expect in a multibillion-dollar project like this. U.S. Bank is the agent for a nearly $350 million term loan. An Indian bank called ICICI is listed as the agent for an additional $530 million of project financing, while another Indian bank is the agent for $140 million in still more debt.

Down the list of creditor claims — just before what's owed the contractors and others not paid in full by Essar for the half-built taconite processing facility — is a particularly telling one. It's the $7.9 million owed to the Internal Revenue Service for withholding tax.

This claim is listed as contingent or disputed, but if it's what it appears to be, this was no ordinary case of financial distress. Not forwarding the money withheld from employee checks to the IRS is not a sign that the company is like a farmer so poor he has to eat the seed corn. It's a farmer so desperate he has to eat the dining-room chair.

One of the things to be decided by the bankruptcy court looks to be whether those leases were properly terminated. The state has taken the view that Essar defaulted on provisions of the most recent agreement between the parties, which had been designed to give Essar a little more time to get new financing in place.

Essar claimed it beat that deadline by filing for bankruptcy protection, and that means it can prevent the termination of the leases until it has a chance to work out a reorganization of the project's finances.

Essar argued, in a news release it put out to compete with the governor's, that one thing it really wants is to protect the investment in the plant so far. Whether or not that's a fair point, it should be no surprise that Essar won't admit failure and move on. After all, the purpose of a bankruptcy court is to get a company that can't pay its bills some breathing room to come up with a plan to climb out of a financial hole.

Management has at least four months to complete its plan to reorganize the finances, a deadline that usually can be extended. And if it looks like it's going to be a battle with creditors, Essar doesn't seem to be the kind of company to flee the battlefield. Essar has been hanging tough, for example, in a fight over the future of a company called Essar Steel Algoma, a steelmaker in Sault Ste. Marie, Ontario.

Essar bought the operation in 2007, reorganized its finances in 2014 and then last year took it into Canada's form of bankruptcy protection. Since then, Essar basically has been trying to buy the assets back from the creditors, even though an Ontario court in May nixed Essar as a bidder because "the subject bidder lacked the financial ability to consummate the proposed transaction."

A New York private equity manager jumped into the lead as the likely buyer, but the steelworkers union didn't much like this proposed buyer. The union decided to join up with a group called Ontario Steel Investment Ltd. on a new proposal to buy the Algoma operation for roughly half of what Essar had paid for it nine years ago.

A letter of intent between these parties was announced last week, a few days after Essar Steel Minnesota made its bankruptcy filing.

Who is Ontario Steel Investment? It described itself in its news release as "a consortium of steel industry specialists, including the shareholders of Essar Global."

If Minnesotans wonder how Essar has the money to chase the Algoma operation but not to pay its creditors in Minnesota, well, they are separate deals. And it's probably worth noting that Essar also has been trying to elbow itself to the front of the line of bidders for the assets of U.S. Steel Canada, an operation also in bankruptcy.

Essar more or less used the same game plan it tried with Essar Steel Algoma to successfully buy back from creditors a U.S. subsidiary of Essar called Trinity Coal Corp., which had been pushed into bankruptcy in 2013 by its creditors.

So as much as the governor wishes this company out of his state, it would be difficult to handicap the odds of what comes first: Essar losing control of the Nashwauk project or Dayton's second term as governor ending in 2019.

Seems like a toss-up.

lee.schafer@startribune.com 612-673-4302