Back-To-Normal Plan In Doubt As Blackjewel Looks To Quick Sale
On July 5, Travis McRoberts, an attorney representing the recently bankrupt coal company Blackjewel, gave insight into a reorganization plan.
"Our hope, and everything we are working toward as diligently and quickly as we possibly can, is to line up that additional financing that we need to bring back all the employees and run the mines at full capacity," he said.
That came at the end of Blackjewel's first week of bankrutptcy, which resulted in closing its mines and sending home about 600 workers. The mines have since partially reopened with the help of a skeleton crew, though no active mining is taking place.
Two weeks after that hearing, on July 19, Blackjewel's attorney Stephen Lerner said the plan had changed since then.
"[It was] never the intention that we would absolutely, positively, be able to re-open. That's not something the debtors can do on their own," he said.
A status report posted today from the company reinforced Lerner's statement. A reorganization plan may no longer include a full capacity reopening of the mines and instead is looking towards a speedy sale of its assets.
"The Debtors' goal is to seek to arrange an expedited sale process intended to maximize the value of their assets for the benefit of the estates and their creditors and, to the greatest extent reasonably possible, to allow more employees to return to work," the filing reads.
Clark Williams-Derry, director of energy finance at Sightline Institute, translated the language.
"It's a game of adjusting everyone's expectations. They're no longer thinking, 'Oh get us more money, and we'll be right back in business, your honor.' They've gone way past that. It's clear they are thinking about job losses, mine closures, and breaking the company apart," he said.
The filing adds eight parties have already taken the first step towards purchasing assets, though it's unclear which ones. No sale terms have been finalized and "various stalking horse bids [are] being negotiated," according to the filing. Williams-Derry said that indicates it's unlikely one buyer would take over all the operations.
Andy Blumenfeld, head of market analytics with Doyle Trading Consultants, said time is of the essence to get sales moving forward.
"The longer these mines sit, the more expensive it will become to restart - if at all. There is some mine-sight degradation that takes place because of weather or minimal maintenance," Blumenfeld said.
He added rail delivery numbers indicate other companies are already picking up the slack in coal supply left by Blackjewel, "making a quick sale that much more important as so much is eroding away."
The company's short-term funding will only last through this Thursday, July 25. The company expects to move forward with a plan for an expedited sale process and secure the additional financing in court to make it happen.