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Recent Sixth Circuit Ruling:

| Feb 17, 2021 | Bankruptcy, Business, Firm News

No Standing to Appeal in Coal Act Case

By: Laura Day DelCotto

Chief Bankruptcy Appellate Panel (“BAP”) Judge Tracey N. Wise recently authored an opinion reviewing some of the issues involved in appeals from bankruptcy court rulings. While not really new law, it is a good primer on at least one of the requirements for “standing” to appeal from bankruptcy court orders.

Bankruptcy Meets the Coal Industry

The opinion in In re Murray Energy Holdings Co presents an interesting intersection between bankruptcy law and the federal Coal Act found at 26 U.S.C. € 9710 et seq. It is a ‘must-read’ for coal industry bankruptcy settings.  Murray Energy entered into a settlement, a 363 sale process, and a chapter 11 bankruptcy plan which collectively acted to relieve it of its obligations to beneficiaries under the Coal Act. Murray had over 2,200 retired employees, spouses and dependents, costing over $60,000 per day on Benefits under their individual employee plan (IEP). There is no doubt that these costs were unsustainable.

Under the Coal Act, prior employers may be liable if a subsequent company to whom it sold coal assets later ceases operations. Bankruptcy courts have been dealing with these issues for decades, since often the retiree obligations are at issue and the Coal Act obligations will not be paid.

Understandably, CONSOL, as the prior owner of a certain mine complex previously sold to Murray, was concerned about its liability to former employees and retirees. While the bankruptcy court rulings made clear that nothing was being determined regarding CONSOL’s exposure, which would be left for another day in another court, CONSOL appealed.

Appellate Jurisdiction for Bankruptcy Appeals

The Sixth Circuit BAP dismissed the appeal in its opinion issued on February 1, 2021. As noted in the opinion, the issue of every appellant’s standing is a “threshold question” in every appeal. Further, in the Sixth Circuit, a party appealing a bankruptcy court’s order must establish that is a “person aggrieved” by the order. The rationale for this principle is “to prevent parties indirectly affected by the bankruptcy-court rulings from bringing appeals on tangential issues.” Again, this opinion is a must-read for some fundamentals on appellate standing. At the end of a thorough ruling, the BAP held that because CONSOL could not show that its property was diminished, its burdens increased, or its rights impaired, CONSL did not have a “direct, pecuniary interest” in the rulings and was not a “person aggrieved” as defined under Sixth Circuit law.

Chapter 11 bankruptcy cases are complex and fast-moving settings with multiple parties’ interests being implicated in various ways, often unexpectedly. When you have large economic interests in any way affected, it is important to show up and participate along the way. While CONSOL did that, it ultimately has to go to another venue to finish out the issues on its own obligations.

Our attorneys are experienced in all aspects of chapter 11 cases, including many prior complex coal industry cases.

About DelCotto Law Group

DelCotto Law Group is Kentucky’s asset protection law firm known for its commitment to the lifetime success of its clients. With offices located in Lexington, Louisville and Danville, DLG serves Kentuckians with complicated financial matters, especially in the areas of bankruptcy and complex litigation. For more information please call (859) 231-5800, email [email protected] or reach us on our contact page.

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