The Coal Industry
Kentucky is located in the heart of the Central Appalachian coal country. Being located in one of the nation’s top producing coal states, the coal industry is well known as one of the Commonwealth’s top industries. However, the cyclical nature and volatility of coal prices can lead to the need for a coal companies, contract miners, or suppliers to these parties to seek relief from their debts under the bankruptcy code.
At DLG, we have significant experience in representing different constitentuities in coal bankruptcies including debtors, creditors, lessors, shareholders, landowners creditors’ committees and preference defendants.
Several issues arise in a typical coal bankruptcy and each can have a major impact on the outcome of the bankruptcy. These issues include:
Bonding – What amounts are due to continue all necessary bonding?
Reclamation/Environmental obligations – Is the debtor current on its reclamation obligations? What remediation needs to be performed? How active are the standing federal regulations in the case? What amount is truly needed to abate any violations?
Permitting – Are there any administrative actions pending to terminate or restrict the use of permits? Can the permits be transferred in a 363 sale? Are there pending MSHA violations or issues?
Coal Supply Contracts – Does the debtor have both long-term and short-term coal supply contracts? When do these contracts expire? Does the debtor have sufficient income from these contracts to fund the bankruptcy including administrative costs?
Lease Issues – Did any coal leases terminate pre-petition? Does the debtor have the ability to perform its obligations under the leases? What amounts are necessary to cure? Equipment leases are often numerous.
Any of the above issues, and others, can have a major impact on the bankruptcy proceeding. DLG’s specific experience in the coal industry helps to guide its clients through these complex matters.