Trinity Coal on Sept. 7 filed a first amended disclosure statement and reorganization plan with its bankruptcy court, which are already drawing objections from coal landholding companies that say they’re too vague on how land companies claims will be treated.
Like an original disclosure statement and reorganization plan filed on Aug. 15, the Sept. 7 revision calls for the creation of a “Liquidating Trust” that will take on the Trinity Coal assets and then try to sell them. The trust will only mine coal in the meantime to the extent needed to satisfy any existing obligations.
Trinity Coal, once a major Central Appalachia producer, was forced into Chapter 11 protection earlier this year by creditors at the U.S. Bankruptcy Court for the Eastern District of Kentucky. It eastern Kentucky coal operations, and some of its southern West Virginia operations have been shut due to poor markets, with only its Deep Water metallurgical coal operation in West Virginia now producing coal.
Western Pocahontas Properties LP (WPPLP) and WPP LLC, collectively the “WPP Entities,” on Sept. 12 filed a protest about both versions of the plan. All such objections are due to be heard at a Sept. 19 court hearing.
WPPLP is a lessor to debtor Deep Water Resources LLC under a 2008 lease. WPP LLC is a lessor to debtor Falcon Resources LLC. WPP LLC’s claim arises from a base lease dated January 1, 1956. This lease has been amended and modified from time to time.
WPPLP and WPP LLC objected to the proposed cure amounts for each lease. “The WPP Entities object to the Disclosure Statement because it does not provide adequate information for the WPP Entities to determine how their claims are to be classified – leases assumed or rejected,” said the Sept. 12 filing added. “The Disclosure Statement refers to a Schedule of Assumed Executory Contracts and Unexpired Leases but no such schedule is attached. Because of this lack of information, the WPP Entities cannot make an informed decision on the Disclosure Statement.”
Further, in connection with the Falcon Resources lease, Falcon Resources owes WPP LLC for escrowed funds as a result of a failure to obtain a valley fill permit by the end of 2010, the companies added.
Another coal landholder, The Elk Horn Coal Co. LLC, said in its own Sept. 12 filing that it is not objecting to either disclosure statement right now, but reserves its right to object to confirmation of any plan filed by the debtors in these chapter 11 cases.
Filing a Sept. 12 objection along a different line of argument was Denham Commodity Partners Fund III LP (DCPF III), a creditor and party in interest in the chapter 11 cases, along with Travis Coal Restructured Holdings LLC (Travis Coal), a subsidiary of DCPF III.
“The proposed Plan is an attempt by the Debtors to collaterally attack preexisting and ongoing arbitration claims of Travis Coal against [Essar Global Fund Ltd. (EGFL)], the Debtors’ controlling insider,” said Denham. “The Plan depends on findings tantamount to third party releases of EGFL that EGFL would use to attempt to bolster its position in its pending Arbitration Proceeding (as defined below) with Travis Coal. This Court, however, lacks jurisdiction to make such findings with respect to the obligations of the non-Debtors EGFL and Travis Coal in the non-bankruptcy Arbitration Proceeding. Because the Plan is contingent on findings from this Court that exceed the Court’s jurisdiction, violates the Bankruptcy Code and is inconsistent with well-settled case law in the Sixth Circuit and around the country, the Plan is patently unconfirmable.”
Denham noted that the “EGFL Guarantee” in question arose out of the April 2010 sale of Trinity Parent Corp. by Travis Coal to Essar Minerals Inc. (EMI). To “induce” Travis Coal to agree to the sale and the deferral of a portion of the purchase price, Essar Global Fund Ltd. (f/k/a Essar Global Ltd.) entered into the EGFL Guarantee with Travis Coal and the Senior Secured Credit Facility Administrative Agent on April 7, 2010.