AV's Intern Team | June 14, 2016 | No Comments
By Brian Sewell
Following months of tumultuous court proceedings, major coal companies are seeking approval for plans to exit bankruptcy — despite the objections of key stakeholders including regulators, lenders and union miners.
On May 5, Arch Coal revealed a plan to emerge from bankruptcy that sheds little light on how the company will pay to clean up its mines or meet its obligations to employees or the group of lenders that hold most of its debt. The company’s plan does, however, ensure senior lenders will be paid. If approved, the plan would leave junior lenders and current shareholders with scraps.
But regulators and environmental groups say Arch’s plan is most problematic for how it fails to address hundreds of millions in cleanup costs at the company’s mines in Central Appalachia and western states.
Several states have allowed Arch and other companies to self-bond, a practice that allows the company to insure the cost of restoring the land after mining based on their financial history, rather than requiring collateral or a more secure form of bonding. Environmental groups including the Powder River Basin Resource Council argue the option to self-bond should be off the table for companies that have gone through bankruptcy.
Although Arch pledged to honor its commitment to pay employee benefits, the company reserved the right to change pension and healthcare contracts. Another struggling coal giant, Alpha Natural Resources, was recently allowed to break its contract with United Mine Workers of America, a move that could affect more than 3,000 employees and retirees. According to the Associated Press, the company also plans to eliminate benefits to non-union miners.
Both Arch and Alpha are pressing ahead; Arch’s creditors will vote on its restructuring plan in June, and a vote on Alpha’s plan will come in July.
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