Bankrupt coal producers in Kentucky seek more time to reorganize

The bankruptcy court for coal producer Licking River Mining LLC and related companies has scheduled a Dec. 17 hearing on a request by the companies for extra time to file a reorganization plan.

The Nov. 25 extension requested filed with the U.S. Bankruptcy Court for the Eastern District of Kentucky was from Licking River Resources Inc., Licking River Mining LLC, S. M. & J. Inc., J.A.D. Coal Co. Inc., Fox Knob Coal Co. Inc., U.S. Coal Corp., Harlan County Mining LLC, Oak Hill Coal Inc., Sandlick Coal Co. LLC, and U.S. Coal Marketing LLC. They want the court to extend the exclusivity periods within which they may file their reorganization plan and disclosure statement through and including May 8, 2015, with a new deadline of July 9, 2015, to solicit acceptances of that plan.

Involuntary Chapter 11 petitions for some of these companies were filed by creditors with the court in May and June of this year, with other affiliated companies brought into bankruptcy protection this past fall. The original companies in bankruptcy, and the ones added later, now have two separate sets of deadlines to file reorganization plans and win creditor acceptances of those plans. The new motion would consolidate those deadlines.

Said the Nov. 15 extension request: “The Debtors’ bankruptcy proceedings involve sizeable and complex business and financial operations involving more than one thousand interested parties and many millions of dollars in assets and liabilities, and the Debtors have made progress since the commencement of their bankruptcy cases. The Debtors have been working diligently since their cases began to move their reorganization process forward as expeditiously as possible, and they have been and continue to pay their bills as they become due. They have prepared and filed their Schedules, Statements of Financial Affairs, and related Amendments. They have presented three sets of first-day motions, first for the Subsidiary Debtors, then for U.S. Coal, and most recently for the Additional Debtors. They engaged in cash collateral negotiations lasting many weeks that resulted in the entry of a consensual final cash collateral order. They have participated and continue to participate in discovery proceedings with the Committee and have addressed the Committee’s request that the Original Debtors file Chapter 11 petitions for the Additional Debtors. They have searched for and obtained a commitment for debtor-in-possession financing for certain of the Debtors. While doing all of this, the Debtors have also prepared long-term financial projections, formulated options for exit from Chapter 11, and begun discussions regarding potential exit strategies with their major secured lenders and the [unsecured creditors] Committee.”

U.S. Coal, the parent of each of the debtors, was formed in 2006 for the purpose of acquiring and consolidating several smaller coal operations and taking advantage of perceived arbitrage opportunities between private and public market valuations through an anticipated initial public offering. U.S. Coal operates through two divisions (previously independently owned and operated). In January 2007, U.S. Coal acquired Licking River Resources, Licking River Mining, SM&J, and Oak Hill Coal. These entities collectively are referred to as the “Licking River Division.”

In April 2008, U.S. Coal acquired JAD, Fox Knob, and Sandlick Coal. These entities, collectively, are commonly referred to as the “JAD Division.”

U.S. Coal’s operations are located in Central Appalachia in eastern Kentucky. Between the two divisions, U.S. Coal controls approximately 80,000 acres, the majority of which is leased. Licking River Resources has about 26.3 million tons of surface reserves under lease, and JAD has approximately 24.4 million tons of surface reserves comprised of both leased and owned real property. At present, U.S. Coal has three surface mines in operation between its two divisions and associated highwall miner operations at each location, said an Oct. 1 filing by the companies with the court.

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.