Blackjewel LLC and affiliated companies have asked a bankruptcy court not to order the payment of idled workers’ wages ahead of other creditors’ claims.
Also, the companies seek the court’s approval to terminate employees’ health insurance, effective Saturday.
Meanwhile, one of Blackjewel’s creditors is expressing concern about extended delays in the sale of several properties to other coal companies.
These are among the court actions filed within the last week in the case.
Idled employees of Blackjewel and affiliated companies have asked the bankruptcy court in West Virginia to place priority on getting their wages paid.
More than a thousand workers in four states received paychecks June 28, but they bounced. Blackjewel filed for Chapter 11 protection on July 1.
In an Aug. 27 filing, the companies object to a motion that, if approved, would authorize payment of wages.
The filing notes that Blackjewel was unable to secure the financing needed to sustain operations and pay certain pre-filing wages and benefits.
“The Debtors are acutely aware of the hardship their inability to pay has caused their employees and are focused on doing everything possible to address and remedy the situation,” it states. “The fact remains, however, that the Debtors simply do not have the ability or financial wherewithal to satisfy their employees’ claims for Prepetition Wages at this time.”
Also, Blackjewel’s attorneys assert that putting claims for unpaid wages ahead of other creditors would violate standard bankruptcy practices.
“While, again, the Debtors are sympathetic to the request, at this time and under the current circumstances there is simply no basis to justify compelling the Debtors to satisfy claims for Prepetition Wages ahead of senior or other similarly situated creditors,” the filing states. “More specifically, granting the request of a non-Debtor third-party to compel the payment of claims for Prepetition Wages would, under the current circumstances, offend the priority scheme set forth in the Bankruptcy Code and the ‘doctrine of necessity,’ and circumvent the automatic stay by allowing a third-party to force collection on a prepetition debt.”
Meanwhile, attorneys for Blackjewel have argued against efforts to prevent the removal of coal stockpiled at three Virginia facilities.
Friday, a U.S. district judge for the western district of Virginia ordered that the coal stay in place for now because the miners who extracted and prepared it have not been paid.
According to court documents, more than 53,000 tons of clean coal and more than 4,200 tons of raw coal is stockpiled at the Pigeon Creek Processing facility near Stonega. Also, about 20,000 tons of metallurgical coal is stored at a site in Raven and about 16,800 tons are stored at a Honaker site.
Affiliated company Revelation Energy LLC notified employees Aug. 25 that their health insurance will be terminated Aug. 31, subject to the bankruptcy court’s approval.
Since medical insurance is being terminated, the company said, employees will not be able to seek coverage through the federal COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) program. Instead, it said, their options include being added to a spouse’s work-provided coverage or seeking coverage through the federal health insurance marketplace.
To do that, the company explained, employees need to visit www.healthcare.gov or call 800/318-2596. Revelation noted that they have 60 days from the loss of job-based coverage to enroll in the federal marketplace.
In an Aug. 25 court filing, Revelation explained that terminating coverage will avoid the risk that accumulation of new claims for medical expenses will exceed the debtors’ ability to reimburse such claims.
Further, it states that the company is seeking a new health plan for remaining employees and any furloughed employees who are brought back to work, effective when they return to the job.
A creditor is expressing concern to the court about ongoing delays in the sale of several mine operations.
Riverstone Credit Partners-Direct LP serves as the agent for the senior secured lenders in the case. In an Aug. 27 filing, Riverstone explained that it is protecting its interests as a short-term financier.
Riverstone notes that in early August, the court tentatively approved the sale of mines in Wyoming and one West Virginia mine to Contura Energy. Also, Tennessee-based Kopper Glo Mining LLC was set to buy the Black Mountain and Lone Mountain operations, which cover parts of Lee and Wise counties along with parts of Harlan County, Ky.
“For reasons that are not entirely clear to Riverstone, the Debtors have not, as yet, reached agreement with Kopper Glo on seemingly ever-changing revised terms and conditions relative to the sale of the Black and Lone Mountain mines or submitted a proposed order approving the Kopper Glo sale as put on the record of the August 5 hearing,” Riverstone states.
Similar delays have caused the abandonment of Contura’s plan to buy the Wyoming mines, the filing states.