Patriot Coal gets court approval for reorganization plan
V.A. Oct 8 A U.S. bankruptcy court approved Patriot Coal's restructuring plan at a hearing on Thursday, including the sale of a major part of its mines and coal reserves to privately held Blackhawk Mining of Lexington, Kentucky.
Patriot Coal, based in Scott Depot, West Virginia, filed for bankruptcy in May, its second in three years, listing assets and liabilities of more than $1 billion each.
Struggling with plunging prices and a distressed coal market, it had warned it was running low on cash and needed court approval for its plan of reorganization to avoid a liquidation.
In his ruling, U.S. Bankruptcy Judge Keith Phillips said the reorganization plan "makes the most of a very difficult situation."
The Virginia Conservation Fund, Inc, will also take a small share of Patriot's assets, with plans to do environmental reclamations for some of its properties.
In a statement on Thursday, Patriot Coal said it still expected a majority of employees at its mining operations to be offered jobs once the transactions are completed.
"These transactions preserve jobs, help ensure environmental obligations are handled in a responsible manner and maximize value for creditors," CEO Bob Bennett said.
The sales are expected to close within a few weeks and are subject to certain closing conditions.
After compromises on all sides, Patriot Attorney Stephen Hessler said Patriot's final bankruptcy plan was "largely consensual" among creditors, except for fierce opposition from Cortland Capital Market Services, a term lender.
Cortland attorney Jeffrey Jonas said the creditor went from getting a value recovery of 80 percent to zero between Patriot's third and fourth amended plans.
Some language in the bankruptcy plan is still in dispute, and Judge Phillips has scheduled a hearing on Friday to work out any lingering issues. Contract related objections to the plan will be heard during a hearing scheduled for later in October.
On Wednesday, Patriot Coal abandoned a $22 million deal with the Aluminum Company of America, helping to smooth the path for support for its reorganization plan.
Last week, U.S. Democratic presidential candidate Hillary Clinton described the deal with Alcoa as "outrageous" for its treatment of coal miners' retirement benefits.