Bankrupt Walter Energy Set to Auction U.S. Coal Assets

by San Antonio Attorney

Bankrupt Walter Energy Inc. plans to auction its coal assets as part of a proposal to emerge from bankruptcy, as stipulated by a court approval last Tuesday.

Walter Energy has faced backlash from unions and retirees in its home state of Alabama.  The company is one of the four coal companies in the United States that are knee-deep in debt and has filed Chapter 11 protection this year.

The main cause of its bankruptcy is the plunging commodity prices, frail demand and stiffer environmental law.

However, Walter Energy has been offered to go on the auction block, including its mines in Alabama in return for cancelling $1.25 billion of its debt.  The lenders rendered their offer of $5.4 million in cash.

The bid of the lenders is subjected to a higher price at the auction.  This money is intended to be distributed to other creditors.

The company pleaded an approval from the court for rejecting collective bargaining agreements for more than 800 workers involved and also to dissolve retirement benefits for some 3,000 retirees.

U.S.  Bankruptcy Judge Tamara Mitchell recently approved the guidelines for the auction, which is scheduled on Jan.  5.

Mitchell also reminded workers and retirees in the court room that another hearing is slated on Dec 15. and Dec.16 in order to discuss the labor pacts.  The result of the auction for approval is set for Jan.  6 next year.

Walter Energy stated a warning in court documents that its liquidation will terminate by the end of January should the sale gets cancelled.

More than 90 percent of Walter Energy’s coal sales consisted of steel-making coal last 2014.  The company suffered due to depressed prices and also due to low demand from China.

Walter Energy’s operations in Canada are not part of the auction.

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