Bankrupt Patriot Coal Wants to Stop Paying for Retiree Health Care Benefits

by San Antonio Attorney

Bankrupt Patriot Coal Corp. is seeking to break off its obligation to pay for the health care benefits of its nonunion retired workers. According to the company, none of the prospective buyer of its assets would be willing to shoulder the expense.

The coal producer filed its second Chapter 11 bankruptcy in May, because of falling prices for its coal and more restrictive regulations.

An auction has been started on Monday for the majority of its assets, such as mines in West Virginia and reserves in other parts of the country.  Patriot has not mentioned if the exclusive auction had finished.

In a court filing on Monday, Patriot Coal said any purchaser of the company won’t be able to afford the retiree related costs.  If the court will grant the request, 969 retirees would be affected.

The company recommended transferring them to a benefit trust for the union.  However, a lot of them would only get an unsecured claim, which will probably have minimal worth.

If the benefit trust works out, the company plans to give $3 million to the trust and an additional $1 million for the retirees’ official committee.

Patriot has already asked permission from the bankruptcy judge to get rid of any responsibility to continue making contributions to the United Mine Workers of America 1974 pension plan. For that reason, hundreds of UMWA members rallied at Patriot Coal’s headquarter last month.

Recently, creditors attacked the company’s plan to exit bankruptcy and one of its lenders tossed its support behind the attempt to shut down the miner under Chapter 7 if it does not get confirmed by the court next week.

In court papers filed by Fifth Third Bank, the bank stated that it was uniting with Barclays in demanding the conversion of Patriot Coal’s bankruptcy case to Chapter 7.

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