The federal bankruptcy judge for Patriot Coal on Aug. 21, following an Aug. 20 hearing, issued several orders, including one that extends the company’s exclusive period to file a reorganization plan to Dec. 1 of this year.
Without that extension, other parties could file their own competing plans for reorganizing this major coal producer, which sought Chapter 11 protection in July 2012. The case is being handled at the U.S. Bankruptcy Court for the Eastern District of Missouri by Judge Kathy Surratt-States.
The new deadline for Patriot to solicit acceptances of any reorganization plan from interested parties, like creditors, is Jan. 30, 2014. The old deadlines had been Sept. 2 for the reorganization plan and Nov. 1 for the acceptances.
In its July 30 request for these latest deadline extensions, Patriot wrote: “These chapter 11 cases passed the one-year mark on July 9, 2013 and now stand at their most critical juncture. The Debtors and the United Mine Workers of America (the ‘UMWA’) are continuing to work toward a consensual resolution regarding modification to the Debtors’ collective bargaining agreements and the funding of a trust for certain benefits for the Debtors’ represented retirees. Additionally, the Debtors are engaged in active discussions with Knighthead Capital Management, LLC and Aurelius Capital Management, LP (together, the ‘Potential Backstop Parties’) on the potential terms of a plan of reorganization that would involve an investment of hundreds of millions of dollars into the Debtors’ estates through a rights offering backstopped by entities managed by the Potential Backstop Parties. The Debtors are also in discussions with certain other parties regarding exit financing proposals and potentially providing the Debtors the capital they need to emerge as a viable and competitive company.”
Also, on Aug. 22, following arguments at the same Aug. 20 hearing, the judge approved a recent compromise deal on benefit cuts with the United Mine Workers of America union. The court had in May approved major benefit cuts that were then imposed on July 1, with the company then able to work out a consensual deal with the union that softens some of those cuts and gives the company a greater degree of labor peace going forward.
In 2012, St. Louis-based Patriot sold a total of 24.9 million tons of coal, which was a reduction of almost 20% from the 31.1 million tons sold in 2011. Patriot is the tenth largest coal-producing enterprise in the U.S. based on 2012 coal production and the sixth largest coal-producing enterprise based on 2012 revenues.