At press time Wednesday, attorneys were set to argue the fate of coal stockpiled on five Blackjewel LLC sites in Virginia, Kentucky and West Virginia.
A West Virginia bankruptcy court has been asked to keep the coal onsite until the company, now undergoing Chapter 11 reorganization, pays miners what they are owed for work done before July 1. That’s the day when Blackjewel filed for bankruptcy and told an estimated 1,700 employees in four states to go home.
Employees are still waiting to see what comes next.
Meanwhile, attorneys for Blackjewel and its customer argue that the coal will begin to deteriorate toward uselessness if it is not moved soon.
The parties agreed to set a hearing on the dispute for yesterday afternoon. It was expected to continue today.
Blackjewel workers received paychecks June 28, but they bounced.
The U.S. labor department argues that since Blackjewel miners have not been paid for work done before the July 1 bankruptcy filing, any stockpiled coal is “hot goods” and cannot be transported offsite.
According to court documents, more than 53,000 tons of clean coal and more than 4,200 tons of raw coal are stockpiled at the Pigeon Creek Processing facility near Stonega. Also, about 20,000 tons of metallurgical coal are stored at a site in Raven and about 16,800 tons are stored at a Honaker site.
Further, about 20,000 tons of coal are stockpiled at a site in Harlan County, Ky. And, on Aug. 29, the labor department received evidence there is coal stockpiled at the Pax mine in West Virginia.
Blackjewel argues that its customer for the coal, Blackjewel Marketing and Sales Holdings, should receive the goods as soon as possible because leaving the coal stockpiled outdoors will cause its value to fall.
Blackjewel Marketing and Sales Holdings is a separate firm not included in Blackjewel LLC’s Chapter 11 reorganization case.
Blackjewel and associated companies claim the customer “may refuse to pay the balance owed in respect of the Coal and/or that failure to move the Coal will interfere with Debtors’ ability to close certain asset sales or give rise to claims of breach of contract by third-party purchasers.”
But the labor department argues that Blackjewel Marketing and Sales “is not a good faith purchaser,” meaning that possible devaluation of the “hot goods” is not relevant in this case.
Blackjewel LLC was, during the relevant time period, a 30 percent owner of the parent company of Blackjewel Marketing and Sales, according to the acting U.S. labor secretary. A court filing notes that former Blackjewel LLC chief executive Jeff Hoops stated that Blackjewel Marketing and Sales “is effectively the only customer of Blackjewel.” Two other firms, Javelin and Uniper, sell the coal to third-party customers.
Further, the labor department asserted in court filings that the court should prohibit Blackjewel from introducing evidence regarding the oxidation of coal “because such evidence is irrelevant to establishing whether the coal is considered ‘hot goods’” under federal law.
Also, the labor department argues, the debtors have consistently misled the court in detailing the amount and value of the coal in question. “The Debtors have yet to identify all of their assets and have continued to stockpile coal and put it into commerce after they filed for bankruptcy.”
Finally, the labor secretary asserts, Blackjewel Marketing and Sales has yet to pay money that Blackjewel LLC claims has been agreed to in exchange for the coal.
In late August, U.S. Judge James Jones of Virginia’s Western District issued a restraining order to make certain the coal stored in Virginia is not moved. He did so at the labor department’s request.
Meanwhile, Blackjewel miners in Harlan County have blocked railroad tracks leading to a mine near Cumberland since mid-July. The protest began when someone spotted a CSX train loaded with coal trying to leave the site. Miners and CSX later reached agreement for the railroad to move its engine but leave the loaded coal cars. The protesters have vowed to stay until the miners are paid their back wages.