The bankruptcy judge for Alpha Natural Resources on Sept. 3 approved several first-day motions from the coal producer, including ones that allow it to continue signing coal supply contracts and to continue its surety bond program.
On Aug. 3 Alpha Natural Resources and subsidiaries filed for Chapter 11 protection at the U.S. Bankruptcy Court for the Eastern District of Virginia. The company, which is one of the top coal producers in the U.S., said it intends to reorganize.
One of the Sept. 3 approvals said Alpha can keep entering into coal sale contracts in the ordinary course of business.
“Pursuant to sections 105(a) and 363 of the Bankruptcy Code, the Debtors are authorized, but not directed to: (a) enter into and perform under Coal Sale Contracts, including but not limited to engaging in communications and transactions to enter into, perform under, negotiate, adjust, modify, settle and terminate such contracts; and (b) perform Ancillary Transactions necessary or appropriate to initiate, implement, execute and perform Coal Sale Contracts, including but not limited to arranging and paying for coal transportation and delivery, entering into escrow agreements, purchasing coal from third-party coal producers and taking physical delivery of commodities; provided, that the Debtors will disclose (any such disclosure, the “Contract Disclosure”) the material terms of any Coal Sale Contract into which they enter that has a term of over fifteen months and gross revenue expected over the contract term (to the extent quantifiable or reasonably estimable, as reasonably determined by the Debtors in their sole discretion) in excess of $125 million to (a) counsel for the official committee of unsecured creditors appointed in these chapter 11 cases (the “Committee”) and (b) counsel to the lenders under the Debtors’ proposed debtor in possession facility; provided, further, that all recipients of any Contract Disclosure shall keep the Contract Disclosure strictly confidential and shall not disclose the Contract Disclosure or any portion thereof to any individual or entity without the Debtors’ prior written consent,” said the order.
“Nothing in the Motion or this Final Order shall: (a) authorize the Debtors to pay any prepetition claim of any party, including any claims arising under the Prepetition Coal Sale Contracts; or (b) be deemed or construed as (i) an admission as to the validity or priority of any claim against the Debtors, (ii) a waiver of the rights of (A) the Debtors, (B) the Committee, (C) Citibank, N.A., as administrative and collateral agent under the Debtors’ proposed postpetition credit facility or (D) any other party in interest to dispute any claim on any grounds, (iii) a promise to pay any claim, (iv) a request to assume or reject any executory contract or unexpired lease pursuant to section 365 of the Bankruptcy Code or (v) a limitation on the authority of the Debtors to conduct their businesses in the ordinary course without seeking the approval of this Court.”
Said the Sept. 3 bond order: “The Debtors are authorized, but not directed, to maintain, continue and renew the Surety Bond Program without interruption, including, but not limited to, paying all amounts due and payable postpetition pursuant to the Surety Bond Program, renewing or securing new Surety Bonds, posting collateral and honoring Indemnity Agreements; provided that the Debtors shall not pay any amounts due and payable postpetition that are attributable to the prepetition period in an aggregate amount in excess of $75,000 absent further order of the Court; provided further that, notwithstanding any of the foregoing, the Debtors shall (a) consult with the official committee of unsecured creditors appointed in the Debtors’ chapter 11 cases (the “Committee”), (b) consult with Citibank, N.A., as administrative and collateral agent under the Debtors’ proposed postpetition credit facility (the “DIP Agent”) and (c) obtain a further order of the Court prior to paying any amount or making any material modification to the Surety Bond Program that, in either case, is outside the ordinary course of the Debtors’ businesses and not consistent with the Debtors’ past or industry practices; provided further that, to the extent the Debtors seek to provide collateral in connection with obtaining new Surety Bonds or provide additional collateral for the postpetition renewal of Surety Bonds, the Debtors shall provide such collateral only to the extent permitted under any debtor-in-possession financing facility.
“Nothing contained in the Motion or this Final Order shall be deemed or construed as: (a) an admission as to the validity or priority of any claim against the Debtors; (b) a waiver of the rights of (i) the Debtors, (ii) the Committee, (iii) the DIP Agent or (iv) any other party in interest to dispute any claim on any grounds; (c) a promise to pay any claim; (d) as a determination that any Surety Bond, Indemnity Agreement or related agreement to which the Debtors are party is an executory contract within the meaning of section 365 of the Bankruptcy Code; (e) a request to assume or reject any executory contract or unexpired lease, pursuant to section 365 of the Bankruptcy Code; or (f) a limitation on the authority of the Debtors to conduct their businesses in the ordinary course without seeking the approval of the Court.”