Coal producer Peabody says it may file bankruptcy plan by Dec. 14

The U.S. Bankruptcy Court for the Eastern District of Missouri is due for a Dec. 14 hearing on a Nov. 30 motion by Peabody Energy, the nation’s largest coal producer, to extend the deadline for it to file a reorganization plan without having compete with any plan lodged by an outside party.

It wants a new deadline to file that plan of Feb. 13, 2017, and a new deadline to solicit creditor acceptances of that plan of March 17, 2017. Currently, the exclusive plan filing period ends on Dec. 14, 2016, and the creditor solicitation period expires on Feb. 15, 2017. Those current deadlines were the results of a prior extension authorized by the court, called the “Second Exclusivity Order.”

On April 13, 2016, Peabody and related companies, buffeted by the same poor coal market conditions that have driven other U.S. coal producers into bankruptcy lately, commenced their reorganization cases by filing voluntary petitions for relief under the Bankruptcy Code.

Said the Nov. 30 extension request: “As the Court is aware, the Debtors are 153 separate legal entities that operate mining locations and other businesses across the globe. Since the commencement of the chapter 11 cases, the Debtors have focused on stabilizing their operations, complying with the requirements of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, developing a restructuring plan that maximizes value for stakeholders and ensures a viable company post-emergence and negotiating the contours of the plan with their major creditor constituencies. To that end, the Debtors have made considerable progress on a variety of issues, including, most importantly, the development of their plan of reorganization, and have taken a number of critical steps to promote their reorganization.”

“Since the filing of the Second Exclusivity Order, the Debtors have continued to work diligently on multiple fronts to maintain the stability of their business and enhance the profitability of their operations while also participating in negotiations with creditors.”

Recent efforts include:

  • Negotiating the reorganization plan with various creditor groups, including parties to the First Lien Credit Agreement;
  • Analyzing thousands of leases and executory contracts to identify those that are beneficial to the debtors’ estate and should be assumed and those that should be rejected, including hundreds of executory contracts commonly referred to as “overriding royalties”;
  • Negotiating with the relevant regulatory agency for the state of Illinois and filing a motion to approve a stipulation that resolved a dispute concerning the debtors’ self-bonding under Illinois’ law utilizing the $200 million bonding accommodation facility under the DIP Facility;
  • Objecting to the United Mine Workers of America 1974 Pension Plan and Trust (UMWA) Claim 4722 and preparing for arbitration on that claim; and
  • Reviewing thousands of proofs of claims and filing several omnibus objections to duplicate and amended and superseded proofs of claims.

The company added: “Against this backdrop of achievement, and in recognition of the complex issues still facing the Debtors, the Debtors request an order further extending the Exclusive Periods. The Debtors are engaged in active and ongoing negotiations with, among others, the Debtors’ First Lien Lenders, Ad Hoc Noteholders, the Second Lien Noteholders’ Group and the Creditors’ Committee. The Debtors have made considerable progress in negotiating the Plan and currently intend to file the Plan by December 14, 2016. However, in an abundance of caution and in case unanticipated delays arise, the Debtors hereby seek an extension of their Exclusive Periods.”

St. Louis-based Peabody Energy is the world’s largest private-sector coal company and a Fortune 500 company. Among other assets, it controls North Antelope Rochelle, the largest U.S. coal mine, located in the Powder River Basin of Wyoming.

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.