Peabody reorganization at risk from Wyoming litigation -court paper

1 Legal

1 Legal is a Division of 1 Media

1 Legal - 1 Lawyers - 1 Attorneys

 
Need Legal Clients  - Need a Lawyer
 
 

By Tracy Rucinski | CHICAGO

CHICAGO Peabody Energy Corp’s plan to
emerge from Chapter 11 bankruptcy faces a “material risk” that
the U.S. coal producer could suffer a $1 billion revenue loss
due to a disputed lease at the world’s largest coal mine,
according to an objection filed to its reorganization plan.

The plan by Peabody, the world’s largest private-sector coal
company, to cut $5 billion of debt and emerge from bankruptcy in
April is supported by most of its creditors, but has faced a
series of official objections from other parties.

Oil and gas driller Berenergy Corp and Peabody hold
overlapping federal mineral leases in Wyoming’s Powder River
Basin, where Peabody operates the North Antelope Rochelle mine
that provides the bulk of its coal production.

In October a Wyoming District Court ruled that Peabody was
entitled to mine through Berenergy’s wells as long as it made
certain payments to the oil and gas company. An appeal is
pending before the state’s Supreme Court.

Berenergy said in a court filing that an adverse decision by
Wyoming’s high court would prevent Peabody from mining near its
wells, potentially causing the coal producer to lose more than
$1 billion in revenues it projects in the first five years of
its emergence from Chapter 11.

“Thus, that litigation creates a material risk to Peabody’s
post-reorganization financial viability,” Berenergy said in an
objection to Peabody’s reorganization plan filed with the U.S.
Bankruptcy Court in St. Louis.

In an emailed statement, Peabody spokesman said the company
was evaluating the objection and would respond in due course.

Indiana and several environmental groups also objected to
Peabody’s reorganization plan on concerns over how it would
cover about $1 billion in future mine cleanup costs.

At issue is whether Peabody will use third-party bonds to
cover future environmental liabilities in place of “self-bonding,” a federal practice that exempts large coal
companies from setting aside cash or collateral to ensure that
mined land is returned to its natural setting, as required by
law.

A hearing to approve Peabody’s reorganization was scheduled
in St. Louis on Thursday.

Among other objections, certain creditors and shareholders
have opposed the proposed recoveries granted under the plan. And
four former executives, including former chief executive
officer Gregory Boyce, filed a complaint about their retirement
packages.

The U.S. Trustee, a government watchdog for bankruptcies,
has also objected to parts of the reorganization plan.



1 Lawyers
1 Lawyers

1 Legal

#1 Lawyers Search Engine

1 Legal is part of the 1 Search Project

Practice Areas - News - Federal - State - Contact Us


1 Legal

1 Legal is a Division of 1 Media

1 Legal - 1 Lawyers - 1 Attorneys

 
Need Legal Clients  - Need a Lawyer