Patriot Coal gets expedited Chapter 11 review

OREANDA-NEWS. September 17, 2015. A federal bankruptcy judge has approved Patriot Coal's plea to fast track the review of the company's restructuring plan.

The US Bankruptcy Court for the Eastern District of Virginia issued an order today scheduling a combined hearing to confirm Patriot's restructuring plan and disclosure statement on 5 October. Creditors will have until 2 October to vote on the company's proposals.

Patriot filed a motion with the court yesterday seeking the expedited review, warning that it would "reach cash levels that make operating a business of this type impractical by the end of October." Without an expedited confirmation timeline, Patriot will "face the prospect of free-fall liquidation."

The request came after the company twice postponed the auctioning of its assets. The sale is now scheduled for 21 September.

Patriot plans to file a revised restructuring plan and disclosure statement by 18 September. The company has secured more debtor-in-possession financing that will give it the "crucial additional liquidity" it needs to finance the exit from Chapter 11 proceedings, it said.

Patriot has proposed a 28 September deadline for comments or objections, giving creditors and the court 10 days to review.

A committee of unsecured creditors, including US Bank and the United Mine Workers of America union, filed a limited objection to the expedited plan today. The group said that the "extremely truncated timeframe proposed" by Patriot would not give creditors or the courts enough time to review either the plan or the modified disclosure statement.

Patriot has submitted asset purchase agreements to the court to establish Blackhawk Mining and the Virginia Conservation Legacy Fund as stalking horse bidders to buy its assets.

No other bidders have stepped forward so far. The bidding deadline is set for 18 September, after being extended twice from 4 September.

Patriot is also seeking approval on potential changes to its agreement with Blackhawk. Today, it filed a term sheet with potential changes it is discussing with Blackhawk.

Patriot and Blackhawk declined to comment, and counsel representing the unsecured creditors did not return requests for comment.