Coal Tattoo

Appeals court overturns Peabody benefit ruling

Patroit Bankruptcy Protests

Here’s the news in today from the United Mine Workers of America:

The United States Bankruptcy Appellate Panel for the Eighth Circuit today reversed a decision by federal Bankruptcy Judge Kathy Surratt-States that would have allowed Peabody Energy to stop paying health care benefits for some 3,100 retirees that it had assumed in the spinoff of Patriot Coal.

 The strongly-worded decision by the three-Judge panel means that Peabody continues to hold responsibility for paying the health care benefits for this group of retirees, who are mostly in the Midwest.

 “This is a bright ray of good news in what has been a long, dreary period for the retirees, their dependents and widows who have been desperately worried about what’s going to happen to their health care,” UMWA International President Cecil E. Roberts said.

 “Peabody has spent years trying to get rid of its obligations to the thousands of retirees who made it the richest coal company in the world,” Roberts said. “This decision foils part of that plan. And it makes us even more determined to keep fighting to make sure the company lives up to its entire obligation to these miners.”

 In preparation for the spinoff of Patriot, Peabody signed a 2007 agreement with Heritage Coal Co., which was at the time a Peabody subsidiary that Peabody included in the Patriot spinoff. That agreement allowed Peabody to reduce its contribution levels for retiree health care benefits to the same level as Heritage (Patriot) would pay if such levels were modified in the future. 

 Peabody argued that since Heritage (Patriot) was relieved of all its obligation to pay for retiree health care by Judge Surratt-States, that Peabody  should be relieved of its obligation as well. Judge Surratt-States agreed, and issued a ruling in Peabody’s favor on May 29. Patriot and Heritage appealed, and their appeal was supported by the UMWA.

The ruling is posted here.

UPDATED: Here’s a statement from Patriot Coal:

“We are pleased that the Bankruptcy Appellate Panel has found Peabody Energy Corporation responsible for healthcare benefits it assumed at the time of the spin-off of Patriot. The appellate court adopted the position that Patriot has advocated all along – Peabody should not be permitted to use Patriot’s bankruptcy to escape its healthcare obligations to thousands of retirees,” said Patriot President and Chief Executive Officer Bennett K. Hatfield. 

“Patriot remains committed to a fair outcome for our stakeholders, while securing the necessary savings to successfully emerge as a long-term coal producer,” concluded Hatfield.  “The decision of the Bankruptcy Appellate Panel is a welcome development that will help Patriot achieve these goals.”