Late yesterday, Bloomberg brought us this interesting tidbit about the Patriot Coal bankruptcy case:
Patriot (PCXCQ) Coal Corp.’s bankruptcy case should be moved out of Manhattan because the company can’t show it didn’t create two new units with the sole purpose of avoiding other bankruptcy courts, the U.S. said.
The case should be moved “in the interests of justice,” said the U.S. Trustee, an arm of the Justice Department that oversees bankruptcies. The trustee’s request, filed today in Manhattan, where the coal producer’s Chapter 11 case is under way, didn’t specify a new court and joins motions from objectors who say St. Louis-based Patriot’s case should be heard in the Southern District of West Virginia.
Interestingly, as the story points out, West Virginia Attorney General Darrell V. McGraw has also joined in the original motion by the United Mine Workers of America to move this case to West Virginia. As we pointed out in a Gazette story a month ago:
Earlier this week, UMW lawyers sought to have the reorganization case moved from U.S. Bankruptcy Court for the Southern District of New York to Southern West Virginia, where they say such issues can be more appropriately handled.
UMW lawyers noted that Patriot’s bankruptcy filing in New York is based at least in part on two New York-based subsidiaries, both of which were created only in June.
“Nobody mines coal in New York,” the union’s lawyers said in court papers. “Significant issues in this case — whether mines are shut, whether employee wages and benefits are cut — will all directly affect the West Virginia economy while having no such effect in New York.”
This case is vitally important to thousands of working UMWA members and thousands more retired miners and families. UMWA officials say Patriot has 2,000 active union members in West Virginia and Kentucky, along with more than 10,000 retirees and an additional 10,000 dependents, most of them in West Virginia, Indiana, Illinois, Kentucky and Ohio.
In its bankruptcy filings, Patriot seems to be making it clear that it views its union contracts — along with their decent pensions and health-care benefits (or unsustainable labor-related legacy liabilities, as Patriot calls them) — as a drag on the company:
While less than 11.4% of miners currently employed in the U.S. coal industry are represented by the UMWA, more than 42% of the Debtors’ employees are represented by the UMWA.
The NBCWA [National Bituminous Coal Wage Agreement] contains many provisions that restrict the ability of signatory employers to deploy labor and operate their mines in a flexible and cost-effective manner, which puts signatory companies at a cost disadvantage with their union-free competitors. Over the years, an extensive and costly package of pension and non-pension benefits for active and retired miners has evolved under successive NBCWAs, including funding benefits for tens of thousands of retired mineworkers whose employers are no longer in business.