Beleaguered Patriot Coal filed for Chapter 11 bankruptcy for the second time in less than three years on Tuesday, May 12th.
The filing was made in U.S. Bankruptcy Court for the Eastern District of Virginia. The firm had just come out of an earlier bankruptcy in December 2013.
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Patriot Coal also announced that it is actively negotiating the sale of its operating assets. The company also noted it will continue both shipping and mining operations, and has a commitment for $100 million in debt financing from unidentified secured debt holders.
Statement from Patriot CEO
“In light of the challenging market conditions, and after a comprehensive review of our alternatives, the board and management team have determined that this process represents the best path forward for Patriot and its stakeholders,” Patriot President and CEO Bob Bennett explained in Tuesday’s statement.
More on new Patriot Coal bankruptcy
Patriot has eight ongoing coal mining operations in West Virginia. The company currently employs around 2,900 people, and has reported 1.4 billion tons of proven and probable coal reserves. The filing rather vaguely lists the firm’s estimated assets and liabilities at over $1 billion.
Eastern U.S. coal-mining firms have been slowing down and laying off employees amid low natural gas prices, harder-to-mine coal seams, competition from other states and weak market conditions. Part of the problem is the trend of U.S. utilities and large businesses switching from coal to inexpensive natural gas to generate electricity.
United Mine Workers of America spokesman Phil Smith noted that union legal staff was reviewing the bankruptcy documents but had no further comment.
A New York bankruptcy judge approved an $802 million financing deal back in mid 2013 so Patriot Coal could maintain operations during the restructuring.
That reorganization plan was approved in December of 2013 after Patriot settled with ex-corporate parent Peabody Energy over retiree health benefits. Peabody, which spun off Patriot in 2007, was required to spend $310 million over four years to pay for the benefits and also give $140 million in letters of credit to Patriot.
Before the reorganization was finalized, a U.S. Court of Appeals bankruptcy panel reversed a bankruptcy judge’s earlier ruling that Peabody did not have to continue health care benefits for around 3,100 retirees.