Investors Speculate Possible Bankruptcy of another Coal Company

by San Antonio Attorney

Coal prices are going down and it is the main reason why half of the debt issued by coal companies has been unpaid.  A multitude of coal companies have joined the roster of bankruptcy filings last year.  Investors are speculating if the next company to declare bankruptcy is the Peabody Energy Corp.

Peabody’s shares were divided in half since Arch, the other company, filed for Chapter 11 last January 11.  The coal producers have suffered financially due to low coal prices and increasing competition.   The industry has lost more than $4 billion over the past five years due to its substantial loss in market value.

Peabody has exerted its effort in making a debt exchange with its lenders last year, but no finalization was done.  Arch attempted this move but failed in its efforts, leading to the demise of the company.

Should Peabody file for Chapter 11, it will join the roster of competitors who also filed for bankruptcy.  More than five coal miners have filed for bankruptcy in less than two years time.  A restructured agreement equates the debt into $22 billion, according to Bloomberg.

James River Coal Co. filed for bankruptcy last April 2014 in order to restructure its of debt of $819 million.  Patriot Coal, who recently recovered from its Chapter 11 filing last 2013, filed again in May.  Two major metallurgical producers of coal in the United States also filed for bankruptcy last July and August with a total of $12.1 billion in debt.

Cliffs Natural Resources made an official turnover to its new owner, Seneca Coal Resources for a decent amount of $268 million last December.  Cliff’s CEO, Lourenco Goncalves, stated that the sale was made due to several trails the coal mining industry has face over the past years.

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