Blackjewel L.L.C. will be able to draw on $2.9 million in additional short-term funding to keep its bankruptcy proceedings alive. A West Virginia bankruptcy court held an emergency hearing for stakeholders to present their case for or against the proposal.
Stephen Lerner, a counsel representing Blackjewel, argued there is an immediate need for the funds. Insurance and workers' compensation payments both come due today. Failure to secure the funding could have meant a conversion to a Chapter 7 filing. It could also have meant the skeleton crews securing Blackjewel's mines might have been sent home.
Blackjewel still has $2 million in short-term financing secured on July 3. According to Lerner, the two funding facilities, including today's, would allow the company to continue as is through early next week.
Kevin Barrett, a counsel representing Riverstone Credit Partners, which funded the initial $5 million plan, did not object. He did, however, express skepticism.
"This loan is a bridge to nowhere. There's no firm plan that the debtors have beyond Monday, Tuesday, Wednesday. There's no understanding any party on any of the assets. We may just be encumbering the estate to the tune of another $3 million with no real benefit to the estate," Barrett said.
Judge Frank Volk countered that no plan would likely result in a Chapter 7.
"If that's the case, what is the harm in taking the chance that there might be some plan going forward that will materialize that would return on productivity?" Volk asked Barrett.
The Judge and Barrett both questioned whether Blackjewel's creditors were making plans focused more on preserving their mines in the west. For instance, payroll owed to mine workers in the east far outweighs that of the west: $3,667,000 versus $761,000.
Lerner, Blackjewel's counsel, explained the issue in paying eastern miners came through how payroll worked. Wyoming workers received cashier's checks which were all honored save for 13. Appalachian workers, on the other hand, received company checks that couldn't be cashed.
In addition, Judge Volk asked Lerner, "Do you plan on trying to return the properties to full production in advance of the sales?"
Lerner responded, "I can't tell, your honor, that it is possible to bring all the employees back. I won't say it's impossible. But I will say it's less likely in the east than in the west"
Later in the hearing, Riverstone's Barrett reinforces that point: "They don't have any interest really in supporting the east. And so, the fact is the plan in the east is much less defined, much less advanced than the plan probably is out west."
He also raised concern the plan disproportionately benefits Contura, which holds the reclamation bonds for Blackjewel. The company's stock has fallen significantly since Blackjewel's filing.
The $2.9 million will give Blackjewel creditors another few days to negotiate a long-term debtor-in-possession financing.