UPDATE 07/02/19 1:21 p.m.
Blackjewel lawyers filed several documents with the court imploring them for an emergency hearing on supplementary debtor-in-possession (DIP) financing. The company has found an alternative DIP structure with funding coming from an "interested third-party." Without the funding, the Chapter 11 bankrutpcy could turn into a Chapter 7.
"The Debtors are at the precipice of converting these cases to chapter 7. If a hearing on the revised proposal cannot be held today these Debtors expect to have no choice but to convert these cases to chapter 7," document 37 reads.
ORIGINAL 12:36 p.m.
About 600 employees of Blackjewel LLC's Eagle Butte and Belle Ayr mines are not at work today. The West Virginia-based coal company filed for Chapter 11 bankruptcy after one creditor refused to extend a loan due July 17. The company closed both of its mines yesterday as employees were sent home. Insight from bankruptcy filings shows the company simply didn't have the cash to keep operations running. It currently owes workers $4,539,672 in wages prior to the bankruptcy filing.
Blackjewel consultants write the company has an "urgent need of capital infusion." The company has about $138,000 in the bank. It made its case to the judge to allow debtor-in-possession (DIP) financing.
"Most critically, I understand that the Debtors are required to make a payment in the amount of approximately $6 million to fund their employees' salaries, taxes, and benefits on the first day of the Chapter 11 cases. Accordingly, without immediate access to funding, the Debtors believe that they will have no choice but to convert their cases to Chapter 7 cases and liquidate their assets, with the attendant loss of thousands of employees' jobs," the Jefferies LLC consultant wrote.
The private company asked the Bankruptcy Court to allow $20 million in debtor-in-possession financing - they hope it will cover operations for about 13 weeks. It would be funded by CEO Jeff Hoops and Clearwater Investment Holdings. The Wall Street Journal reported Hoops bank froze funds he believed would provide the credit necessary for immediate financing. The Casper Star-Tribune spoke with Hoops who said the United Bank of West Virginia denied the company the $20 million financing to continue operations.
Clark Williams-Derry, director of energy finance at Sightline Institute, said this is "nprecedented for a company to be in that kind of desperate shape in the Powder River Basin... this is a train wreck. Cloud Peak was bad, but this is... holy cow."
In the recent Cloud Peak bankruptcy, it took three days for the Delaware court to approve DIP financing.
Gov. Mark Gordon is meeting with Campbell County Commissioners today at 1:30 to discuss the state's response.
"This closure is hardest on the individuals who work at these important mines and their families, and our most immediate concerns lay with them," Gordon said. "I have asked Director Cooley at the Department of Workforce Services (DWS) to mobilize resources to provide workforce assistance to workers who are impacted by this decision."
DWS' Ty Stockton said there are also two information sessions coming up to get workers the information they need in case they do need a new job.
"If the company doesn't have any options other than to close, if this is a permanent closure, then we want to make sure those folks don't wait until the last minute to get the info they need.