Peabody Energy Faces Several Objections against Its Chapter 11 Bankruptcy Plan

by San Antonio Attorney

Indiana and certain environmental groups are against the plan of Peabody Energy Corp to emerge its Chapter 11 bankruptcy, raising apprehensions over how the debtor is going to pay for the mine’s cleanup costs, which could reach $1 billion.

The majority of creditors agree to the company’s plan to slash $5 billion of debt, but it faced official objections in court filings on Friday.

The opposing parties were against Peabody’s non-disclosure on how it is going to fund the future rehabilitation of polluted mines, a problem that has drawn attention in a number of coal bankruptcy filings recently because of a “self-bonding” federal program.

For a long time, self-bonding has excused big coal companies from allocating money or collateral to make sure that mined terrain would be restored to its natural state, as mandated by law.

Peabody’s reorganization plan stated that it would tackle its self-bonding cleanup duties but did not give any specifics.

Sierra Club said specifics on financing the cleanup were important for parties to decide whether the restructuring plan is viable.

Peabody has self-bonds in Illinois, Indiana, New Mexico and Wyoming.

Vic Svec, a spokesman for Peabody, reportedly said the company was paying all of its present cleanup responsibilities and had fast tracked restoration effort, diminishing its bond obligation by eighteen percent.

He said, “We look forward to continuing to restore the land and provide assurances for future obligations, through a potential blend of both third-party surety bonds and self-bonding.”

Competitors and Alpha Natural Resources and Arch Coal Inc traded self-bond for environmental obligations at operating mines that have third-party bonds when they left Chapter 11 in 2016.

Some of the shareholders and creditors have objections on the proposed recoveries to be given under the reorganization plan, and certain former employees filed a complaint concerning their retirement packages.

The U.S. Trustee has also objected to certain parts of the plan.

 

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