Patriot Coal Creditors Want Bankruptcy to Stay in N.Y.
Stock Chart for Patriot Coal Corp (PCXCQ)
The United Mine Workers union and several insurers who have argued for the move to Charleston, West Virginia, haven’t proven it would be more convenient for all creditors or lead to a more economical Chapter 11 case, the creditors said in papers filed yesterday in U.S. Bankruptcy Court in Manhattan.
“The UMWA asserts that Charleston is more convenient for the workers and retirees it represents -- a goal that is praiseworthy, but should not control the venue analysis,” the creditors said.
Patriot, one of the largest coal producers in the U.S., filed for bankruptcy in July. It was asked first by its union to move the case. The U.S. Trustee, an arm of the Justice Department that oversees bankruptcies, joined in the motion, saying the St. Louis-based company created two new units just before its bankruptcy with what appeared to be the sole purpose of avoiding other bankruptcy courts.
Patriot said New York is the most cost-effective and convenient place for its bankruptcy. Not one of its top five secured creditors is located in West Virginia and the company’s advisers and other professionals have offices in New York, according to court papers filed yesterday.
“Moreover, flights to and from Charleston, West Virginia, are often exceedingly expensive,” the company said, citing prices of more than $2,200 for a refundable, round-trip ticket.
Citigroup Inc. (C) and Bank of America Corp., which helped arrange $802 million in loans to Patriot after its bankruptcy, also said yesterday that they oppose a venue transfer, citing potential increases in travel costs and professional fees.
The company’s bankruptcy counsel, Davis Polk & Wardwell; its conflicts counsel, Curtis, Mallet-Prevost, Colt & Mosle LLP; its investment banker, Blackstone Group LP (BX); and its financial adviser, AP Services LLC, all have offices in New York but not West Virginia, the company said.
Only 10 of the company’s unsecured creditors, holding $9.6 million of the more than $507 million in claims, are based in West Virginia, according to court papers.
Patriot’s facilities, employees, retirees and creditors are largely located in West Virginia, and conducting its bankruptcy in New York makes it more difficult for the company’s 2,000 active employees and more than 10,000 retirees to participate in the case, according to the United Mine Workers. West Virginia has a greater economic interest in the case’s outcome, as most creditors are there, the union has said.
The Department of Natural Resources in Kentucky joined the mine workers’ motion, citing the company’s mining activities in Kentucky. West Virginia has said it has an interest in whether the company sells or abandons its property in that state.
A hearing on the arguments is scheduled for Sept. 11.
Patriot has 12 active mining complexes in Appalachia and the Illinois Basin and controls an estimated 1.9 billion tons of coal reserves, according to court papers. It sells thermal coal to electricity generators and metallurgical coal to steel and coke producers.
In the Chapter 11 filing July 9, Patriot listed assets of $3.57 billion and debt of $3.07 billion as of May 31.
The case is In re Patriot Coal Corp., 12-bk-12900, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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