Court Terminates 401(k) Plans For Blackjewel Miners
The West Virginia court overseeing Blackjewel's bankruptcy has authorized the end of 401(k) plans for all the company's miners. It was one condition of Contura Energy's purchase of the Eagle Butte and Belle Ayr mines. Many Blackjewel workers responded to the news with thanks on Facebook, one commenting "Hallelujah."
That's because the plan termination gives workers the option to receive a cash-out. On July 25, Blackjewel attorney Stephen Lerner said it's the best option for workers.
"We don't believe there's any downside. The employee will determine whether they receive the money, but unless we do this, the employees will not be able to access the funds," Lerner said. The termination was approved on July 26.
Blackjewel employees received a letter on August 9 explaining how the termination would work. Several forms were attached allowing employees to choose whether they would like a cash disbursement or a roll-over into a new retirement account. Previous court hearings qualified there would be a 10 percent penalty for a cash pay-out for any miners under 59-and-a-half years old.
There was a delay in the plan's termination after being approved the last week of July. Blackjewel gave a status report on August 7 that the process was delayed with the need for additional information from American Funds, an investment manager . The day after, the court posted several documents that weren't available to the public. The titles however showed there had been communication regarding employee disappointment in plan termination and expected distributions.
Since August 12, debtors had received finished paperwork from 189 plan participants. They have already paid or are in the process of paying out $2.8 million. Total plan assets sit at approximately $26 million.
As to why the plan is being terminated in the first place, Josh Macey, visiting law professor at Cornell University and bankruptcy expert, said it's hard to say. Contura may not have liked the terms set by Blackjewel or it could want to start its own 401(k).
"It could also suggest that Contura does not expect to have a long-term relationship with Blackjewel's employees. If Contura really plans to operate Eagle Butte and Belle Ayr for a significant period of time, it will have to offer miners some benefits," Macey explained.
Since termination on August 9, American Funds set a deadline for September 13 to receive relevant paperwork from employees. If no forms are submitted by then, workers with over $1000 in their accounts will have their savings transferred over to a separate account. If the account holds less than $1000, American Funds will send a check in the mail with the pay-out.