Sale of Mines in Bankruptcy of James River Coal

August 28th, 2014 by Peter Brackney

A bankruptcy judge in Virginia has approved the sale of three coal mining complexes to Lexington, Ky.-based Blackhawk Mining. The deal was part of the James River Coal Co. bankruptcy, Case No. 14-31848 (Bankr. E.D. Va.).

The three facilities are located in West Virginia, Kentucky, and Indiana. The total sale price was $52 million.

The buyer will pay $20 million to the bankruptcy estate and assume $32 million in liabilities which relate to the three mining facilities. This arrangement is common in bankruptcy because it brings liquid assets into the estate plus it reduces the overall pool of creditors.

Chapter 11 bankruptcy sales can occur either before or after the confirmation of a plan of reorganization or orderly liquidation. In the case of James River, these assets are being sold prior to the plan so that operations can be streamlined and operating costs can be cut. Accomplishing these things may show a viable path toward reorganization in the chapter 11 process.

Bunch & Brock has assisted numerous debtors in the coal industry through the bankruptcy process, including Appalachian Fuels, LLC, Cook & Sons Mining, Inc., and T&T Energy, LLC.

In Appalachian Fuels, LLC, the debtor conducted 363 sales of various mining facilities similar to those in the James River Coal bankruptcy. The Appalachian Fuels sales generated cash for the estate and helped to reduce the overall debt pool as buyers assumed debt related to their acquisitions.