The United Mine Workers of America (UMWA) on Feb. 22 offered limited objections at the bankruptcy court for coal producer Alpha Natural Resources related to an Alpha plan filed with the court on Feb. 8 that proposes an auction for the company’s major mines, including the UMWA-represented Cumberland and Emerald deep mines in Pennsylvania.
For one thing, the union said it was kind of sandbagged by this auction plan. “From the outset of these Chapter 11 Cases, the UMWA understood that the Debtors intended to reorganize through confirmation of a plan of reorganization,” the union wrote. “In this context it made sense for the UMWA to devote substantial time, effort, and resources to negotiating with the Debtors regarding issues arising under sections 1113 and 1114 of the Bankruptcy Code (“CBA Negotiations”).” CBA stands for collective bargaining agreement.
The UMW added: “However, the more recently filed [Plan Structure Agreement], as set out in the Bidding Procedures Motion, provides for a section 363 sale process, which proposes a sale of the Debtors’ core assets to the Pre-Petition Lenders as Stalking Horse Bidder followed by a plan, which upon information and belief is a plan of liquidation. Among the assets to be sold under the PSA are certain mining complexes subject to UMWA collective bargaining agreements (CBAs) which have been the central object of ongoing CBA Negotiations between the Debtors and the UMWA. As such, the PSA not only represents a significant departure from the Debtors’ prior representations throughout these Chapter 11 Cases, but also alters the UMWA’s prior understanding that the Debtors had primary negotiating authority to enforce a binding resolution (if reached) on the CBA Negotiations issues.
“In the sale context, reaching agreement under the CBA Negotiations with the Debtors and Pre-Petition Lenders does not resolve the CBA issues if the Pre-Petition Lenders are not the purchaser of the assets here. The limited objection simply seeks to resolve whether the Debtors will be able to provide the UMWA with assurance that the Successful Bidder will be bound by any agreement reached with the UMWA through these ongoing CBA Negotiations.
“The CBA Negotiations are draining, expensive, time-consuming, and complex. Achieving a resolution often takes weeks—if not months—of proposals, discussions, analysis, and meetings. Here, the CBA Negotiations process has begun, the Debtors are seeking concessions, and the parties are in the process of ongoing negotiations. In order for the parties to continue negotiating in an atmosphere truly constructive and designed better to allow for agreement, it is critical that the Debtors amend the Bidding Procedures to include a provision requiring that any resolution reached as between the Debtors and the UMWA will be binding on any Successful Bidder.”
In August 2015, Alpha, one of the nation’s largest coal producers, sought Chapter 11 protection at the U.S. Bankruptcy Court for the Eastern District of Virginia. The assets subject to the Feb. 8 motion are comprised of:
- all assets (including, but not limited to, all mineral rights, fixed and mobile equipment and logistics assets) used or held for use primarily in connection with the Alpha Coal West mine complexes (Belle Ayr and Eagle Butte) in Wyoming, the business of Pennsylvania Land Resources Holding Co. LLC, Alpha’s natural gas business in the Marcellus Shale in southwestern Pennsylvania, and the McClure, Nicholas and Toms Creek mine complexes in West Virginia and Virginia;
- all coal operations and reserves located in Pennsylvania, including the Cumberland longwall mine complex, the Emerald longwall mine complex, the undeveloped Freeport seam reserves, the undeveloped Sewickley seam reserves and all assets used or held for use primarily in connection therewith, including all logistics-related assets;
- Alpha’s interest in Dominion Terminal Associates, a coal export facility in Virginia; and
- certain other designated assets, including certain working capital (all of which together make up the Reserve Price Assets).
The union noted that it would foster a more constructive negotiation environment if all of the parties were “at the table” to reach an agreement designed to met not only the economics prepared by the Debtors and Pre-Petition Lenders but also knowing that the goal truly is to facilitate a successful sale process. If the CBA Negotiations now are just a “first bite at the apple” and the UMWA will have to negotiate a second time with whomever acquires these assets, it necessarily run the risk of chilling the discussions, the union argued. It said the bid procedures should provide that if the parties reach a successful section 1113/1114 agreement it should be binding on the purchasers of the Cumberland and Emerald mine complexes.