It's been two days since Blackjewel LLC abruptly filed for Chapter 11 bankruptcy and locked the gates at its two Wyoming mines. It turned out the West Virginia private company was in a more financially dire situation than many knew. The early stages did not go as planned, but the presiding judge has approved $5 million in interim funds.
A plan to fund debtor-in-possession (DIP) financing was in the works Monday before CEO Jeff Hoops bank account was frozen. After about five hours in court, the judge denied the financing agreement pushing for an alternate plan.
Today, another hearing resulted in a successful agreement for $5 million to pay back pre-bankruptcy petition expenses including wages, business expenses, and workers' insurance premiums. The agreement was predicated on the removal of CEO Jeff Hoops with little explanation.
Clark Williams-Derry, director of energy finance at Sightline Institute, said the untraditional nature of the bankruptcy so far has to do with Blackjewel's financial situation. It was in a worse position entering Chapter 11 than most other coal companies.
"This is a company that should've been in bankruptcy months ago if not a year ago. But it decided it would try to keep going, keep moving forward, racking up huge amounts of debt, until finally, its bankers and lenders just cut them off."
With or without help from the company, the Gillette community has come together to support themselves. A Facebook group with over nearly 700 people has formed offering jobs and general supplies. Rory Wallet, a production technician with Blackjewel, started the page.
"It doesn't matter if it's just a couple of pounds a hamburger to give to somebody. A couple hundred dollars donated to for… using at a local bar and grill so that somebody can go in and decompress with a beer [or] take their family down to the local ice cream parlor and have an ice cream," Wallet said.
The $5 million won't be enough to re-open the Eagle Butte and Belle Ayr coal mines. The five million will serve as interim funds until a longer-term financial agreement is reached. The court appointed a Chief Restructuring Officer to help run the next stages of bankruptcy.