Coal operator Addington’s bankruptcy case converted to Chapter 7

Larry Addington, one of the most prominent coal operators in the eastern U.S. over the last 20 years, just lost control of his finances, with a bankruptcy court in Kentucky approving a conversion of a Chapter 11 case to Chapter 7.

Addington personally, and a long list of his companies, sought simultaneous Chapter 11 protection on Jan. 26 at the U.S. Bankruptcy Court for the Eastern District of Kentucky. That is the same court that over the past 10 years has handled the bankruptcy dissolutions of two of his prior companies, Horizon Natural Resources and Appalachian Fuels LLC.

Addington had tried to argue that he could reorganize his own finances and those of his newly-bankrupt companies. But the U.S. Trustee for this court was successfully able to argue that Addington could not be expected to work on behalf of creditors within a Chapter 11 reorganization and that a Chapter 7 conversion and a Chapter 7 trustee needed to be appointed to handle these cases.

Judge Joseph Scott Jr. approved the conversion to Chapter 7 on May 14 and named Mark Miller as interim Chapter 7 trustee. Note that a U.S. Trustee is different than a court-appointed trustee like Miller. Miller will preside over a creditor’s meeting scheduled for June 19 at the U.S. Trustee hearing room in Lexington, Ky.

The judge also signed a May 14 order requiring Addington and his companies to turn over various financial reports to the trustee. The Addington companies also in bankruptcy include Appalachian Generating LLC, Coal Strategies LLC, Appalachian Coal Processing LLC and Big Sandy Coal Sales LLC.

Addington noted in a May 8 court filing that after initially objecting to the U.S. Trustee’s Chapter 7 conversion motion, he agreed to go along with it. The May 8 filing had to do with an objection to the conversion filed by the Appalachian Fuels Creditors Trust. The Appalachian Fuels coal mining assets were sold long ago in a separate case, with that case now revolving around resolution of claims and turning over of any final money to creditors. Among other things, the trust argued that an appointed Chapter 7 trustee is, by definition, unqualified to handle cases that are difficult, complex and time consuming. The trust wanted appointment of a Chapter 11 trustee.

“The Debtor, Larry Conrad Addington, voluntarily put himself under the jurisdiction of the Bankruptcy Court and in so doing placed himself under the restrictions and responsibilities of the Bankruptcy Code,” said the May 8 Addington filing. “By joining with the Office of the U.S. Trustee in the Motion to Convert the Case to a Proceeding Under Chapter 7, the Debtor does not seek to avoid those responsibilities but he does seek the opportunity to receive a discharge of his dischargeable debts in the reasonably foreseeable future. The Debtor therefore prays that the Objection (Doc. 95), and the Supplemental Objection (Doc. 100) be overruled and that the proposed Agreed Order as it may be modified by this Court converting the case we are proceeding under chapter 7 be entered, and for such other and further relief as may be just and proper.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.