James River Coal Schedules Asset Auction

by San Antonio Attorney

James River Coal Co. is going to hold an asset auction on Aug. 18 after being delayed several times. If the winning bid contemplates a sale, a hearing to approve the sale would be scheduled two days later.

The asset auction has been postponed five times as it was initially slated for July 8.

James River filed for Chapter 11 bankruptcy protection in April. A combination of a major decline in prices for coal and demand, along with too much debt forced the company to declare bankruptcy. Its stock price fell 63 percent the next day it sought for court protection.

Court documents show that it owes $464.5 million, most of which was caused by the company’s $475 million cash acquisition in 2011 of International Resource Partners and Logan & Kanawha Coal.

James River operates six coal-mining sites in Kentucky, Indiana and West Virginia. The company said tighter government regulations targeted on shifting the country’s energy production toward renewable energy resources have caused the demand for coal to plummet.

The company had taken steps to cut down costs and increase its financial performance. A total of 860 employees and contractors had been laid off. Today, James River Coal has 1,241 workers with full-time and part-time jobs, which includes engineers, miners, mechanics, truck drivers, administration and electricians.

The objective of filing for Chapter 11 bankruptcy protection, as opposed to Chapter 7, is to end up being profitable. To make this happen, the debtor had to renegotiate contracts and leases and either has debts partially repaid or discharged. Creditors and lenders can benefit by working with the debtor and making compromises, because they probably would not get better terms in Chapter 7 liquidation.

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