The bankruptcy court for Licking River Resources and related eastern Kentucky coal companies on March 20 approved a settlement with customer South Carolina Electric & Gas over a severed coal supply contract.
Licking River Resources, 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 are heading toward a sale of their assets and will no longer be functional companies. Their Chapter 11 case is being handled at the U.S. Bankruptcy Court for the Eastern District of Kentucky.
The contract settlement agreement approved March 20 is between South Carolina Electric & Gas and J.A.D. Coal. It covers a January 2014 coal contract, which was worked out before the companies in May and June of that year were pushed into Chapter 11 by creditors.
Said the settlement: “SCE&G will pay to the Debtor the total sum of $2,000,000.00 (the ‘Payment’), upon the receipt of which by the Debtor, the Contract shall be deemed terminated effective immediately following the Debtor’s mid-February coal delivery.”
The settlement said that on Jan. 29 of this year, SCE&G furnished J.A.D. with a notice of termination of the contract pursuant to the Ipso Facto Clause. On Jan. 30, J.A.D. disputed SCE&G’s right to terminate under the Bankruptcy Code. In order to allow the parties time to attempt to consensually resolve the termination issue, they agreed to defer any termination to allow the J.A.D. to make its scheduled deliveries through mid February. Following that delivery, SCE&G deemed the contract terminated as to any future deliveries.