Patriot Coal is back in U.S. Bankruptcy Court in Richmond, Virginia, today — this time on its motion to be released from its labor contracts with the United Mine Workers union.
As The Wall Street Journal reported, the judge yesterday indicated approval of a plan that could allow a Virginia environmental group to buy some of Patriot’s properties with the intent to reclaim them:
Judge Keith Phillips of the U.S. Bankruptcy Court in Richmond, Va., on Monday said he would sign off on the Sept. 9 auction. An affiliate of the Virginia Conservation Legacy Fund will lead off the bidding with its offer to take responsibility for $400 million in liabilities—workers’ compensation, black lung and environmental—tied to the assets.
The auction proposal had received objections from Patriot’s unsecured creditors’ committee and lender agent Barclays Bank PLC regarding the $5 million breakup fee Patriot sought to offer VCLF should it lose the bidding. However, those were resolved during the hearing with an agreement to require any winning bidder’s offer to provide enough cash to cover the fee.
The VCLF bid, which doesn’t include cash, does feature a pledge to issue new equity to Patriot’s creditors.
This month, VCLF attorney Andrew Troop told the bankruptcy court that through the deal, the nonprofit hopes to balance its quest to reclaim land through reforestation efforts while honoring the region’s tradition of coal production.
“Its desire here is to…reclaim land, operate responsibly, provide some return to creditors who otherwise it looks like would receive nothing or very little in connection with this plan, preserve jobs and enter into a new workable resolution with the United Mine Workers” of America union, he said at an Aug. 18 hearing.