Filings from Westmoreland show it’s taking a different approach to its financial obligations from other recently bankrupt coal companies. The coal company is seeking to default on nearly $400 million owed in pension funds, black lung claims and retiree healthcare benefits. Three other coal companies, Alpha, Peabody and Arch all passed along those obligations to re-organization debtors with value reduced in some cases.
The lost benefits wouldn't apply to the Kemmerer mine, which is involved in a separate proceeding that's a month behind. But Morgan warned the future could look even bleaker for the mine — unlike with some other Westmoreland operations, no debtor is lined up to manage the asset in the case where a third-party buyer doesn’t come through.
Peter Morgan, a senior attorney at Sierra Club involved in monitoring proceedings with Westmoreland, put together a chart comparing the four cases. He said those other three companies were more straightforward re-organizations, while Westmoreland feels closer to a fire sale.
"They’re really looking to strip away any liabilities from the few assets that I think continue to hold any value. Nothing in any of the bankruptcy documents I’ve seen suggests that there will be a Westmoreland company at the end of this bankruptcy,” Morgan said.
He said a contributing factor to the departure is likely the state of the coal industry. U.S. utilities are set to retire coal fired power plants this year at double the rate of last year, with an incremental decline in demand for years
"With Westmoreland, we’re seeing a bankruptcy that’s driven by a fundamental change in the underlying industry where companies are just not going to be able to make a go of it anymore,” he said.
Westmoreland’s proposed defaults are still only proposed at the Texas court.
In its restructuring announcement in October, Westmoreland’s interim CEO Michael Hutchinson said it would continue business as usual positioning itself for long-term success.
Earlier this week, CFO Gary Kohn announced his resignation after receiving over a million dollars in bonuses.