A final order was filed Oct. 15 at the bankruptcy court for eastern Kentucky coal producer JW Resources Inc. that allows the sale of JW Resources mining operations to Revelation Energy LLC, a fairly large producer in Central Appalachia.
JW Resources had a quick liquidation, since it only filed on June 30 for protection at the U.S. Bankruptcy Court for the Eastern District of Kentucky. An auction was held for the assets on Sept. 18, with Revelation determined to have submitted the highest or otherwise best bid for these assets.
In exchange for certain amendments made to the mining operations asset purchase deal, coal landholder Penn Virginia Operating Co. LLC agreed to waive and release any and all unpaid administrative claims that it may have against JW Resources. The final order approved payment for Energy Ventures Analysis, a consultant to JW Resources during the sale process.
JW Resources and subsidiary companies are U.S. producers of thermal coal with reserves, mining operations and coal properties located in the Central Appalachian region of Kentucky. By and/or through these operations, the debtors supply different qualities of coal to its customers. JW Resources is the parent and sole shareholder of SCRB Properties, Straight Creek Coal Mining and SCRB Processing.
JW Resources acquired its assets and business operations from Xinergy Corp. in February 2013 (called the “Straight Creek Acquisition”). The Debtors’ business operations comprise what is known as the “Straight Creek” operations, located in Bell, Leslie and Harlan counties, Kentucky, and the “Red Bird” operations located in Bell, Leslie, Knox, and Clay counties, Kentucky.
“Following the Straight Creek Acquisition, there has been a decrease in the demand for coal and a dramatic increase in the cost of mining and processing coal, due in part to burdensome governmental regulations, with the spot price of coal per ton decreasing by 26% through April 2015,” the company said in its June 30 bankruptcy petition. “These factors have contributed to the Debtors’ inability to service its secured debt and to sustain its business operations outside of the protections of the Chapter 11 Cases.
“The Debtors have been unable to obtain needed additional funding from their existing secured lenders, equity holders or other third-parties. In order to maximize the value of the Debtors’ assets for the benefit of all stakeholders, the Debtors retained Energy Ventures Analysis, Inc. (‘EVA’) as their investment bankers to pursue a sale of substantially all of the assets of the Debtors as part of the Chapter 11 Cases. Accordingly, the Debtors have filed a motion seeking to sell substantially all of their assets through an open auction process under section 363 of the Bankruptcy Code.”
Asset buyer Revelation Energy, managed by coal executive Jeff Hoops, has a number of mining operations in eastern Kentucky, southern West Virginia and southwestern Virginia, with most of them located in eastern Kentucky.
David Stetson, Senior Advisor to JW Resources in this case, said in an Oct. 16 e-mail statement: “[T]he bankruptcy of JW Resources Inc. and several related companies was largely resolved on October 15th as Revelation Energy LLC closed on its purchases of certain mining assets and Ritchie Bros. completed its auction of the mine equipment.” He noted that Emily Medine of Energy Ventures Analysis was engaged by the debtors to sell the assets and that Frost Brown Todd served as both corporate and bankruptcy counsel.
This is the latest in a series of bankruptcies in a U.S. coal industry staggering from over three years of lousy coal prices and the closure for environmental reasons of dozens of customer power plants. Patriot Coal is currently being broken up in bankruptcy, while James River Coal was wiped away in bankruptcy a few months ago. Walter Energy and Alpha Natual Resources are currently in bankruptcy protection and trying to reorganize. All of those companies are (or were) much larger than JW Resources.