In re Patriot Coal Corp.

• Decision Date: 29 May 2013
• Docket Number: No. 12–51502–659.,12–51502–659.
• Citation: 493 B.R. 65
• Parties: In re PATRIOT COAL CORPORATION, et al., Debtors.
• Court: U.S. Bankruptcy Court — Eastern District of Missouri

493 B.R. 65

In re PATRIOT COAL CORPORATION, et al., Debtors.

No. 12–51502–659.

United States Bankruptcy Court,

E.D. Missouri,

Eastern Division.

May 29, 2013.

Michael A. Cohen, Theresa A. Foudy, Steven J. Reisman, Turner P. Smith, Ellen Tobin, Curtis, Mallet–Prevost, Colt & Mosle LLP, New York, NY, Timothy E. Graulich, Marshall Huebner, Marshall Scott Huebner, Benjamin S. Kaminetzky, Darren S. Klein, Steven C. Krause, Christopher Lynch, Jonathan D. Martin, Michelle M. McGreal, Elliot Moskowitz, Brian M. Resnick, Michael J. Russano, Lara Samet, Damian Schaible, Amelia Temple Redwood Starr, Davis Polk & Wardwell LLP, New York, NY, Laura Uberti Hughes, Brian C. Walsh, Bryan Cave LLP, St. Louis, MO, Robert G. McLusky, Jackson Kelly PLLC, Charleston, WV, Lloyd A. Palans, Bryan Cave, St. Louis, MO, for Debtor.

Leonora S. Long, Paul A. Randolph, Office of United States Trustee, St. Louis, MO, for U.S. Trustee.

Stuart Komrower, Cole Schotz Meisel Forman & Leonard PA, New York, NY, Thomas Moers Mayer, Paul Bradley O'Neill, Gregory Plotko, Adam C. Rogoff, Anupama Yerramalli, Kramer Levin Naftalis & Frankel LLP, New York, NY, John D. McAnnar, Angela L. Schisler, Gregory D. Willard, Angela L. Schisler, Carmody MacDonald P.C., St. Louis, MO, Michael D. Warner, New York, NY, for Official Committee of Unsecured Creditors.

Stephen K. Shuman, Reeder & Shuman, Morgantown, WV, for Delta Electric Incorporated.

MEMORANDUM DECISION AND ORDER ON MOTION TO REJECT COLLECTIVE BARGAINING AGREEMENTS AND TO MODIFY RETIREE BENEFITS PURSUANT TO 11 U.S.C. §§ 1113, 1114 OF THE BANKRUPTCY CODE

KATHY A. SURRATT–STATES, Chief Judge.

The matter before the Court is the Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 of the Bankruptcy Code and the UMWA's Objection to the Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113 and 1114. Also filed were the following objections of other interested parties, whose participation was limited by this Court to I) one 15–page brief or objection, ii) an opening statement, and iii) a closing argument: Statement of the Official Committee of Unsecured Creditors in Connection with the Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 of the Bankruptcy Code which was withdrawn in part at the time of closing argument,¹ Objection to Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 of the Bankruptcy Code filed by The Ohio Valley Coal Company and The Ohio Valley Transloading Company, Objection to Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefit[s] Pursuant to Sections 1113 and 1114 of the Bankruptcy Code filed by Drummond Company, Inc., Objection to Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefit[s] Pursuant to Sections 1113 and 1114 of the Bankruptcy Code filed by Energy West Mining Company, Statement of Bank of America, N.A., as Second Out DIP Agent, With Respect to the Hearing on Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 of the Bankruptcy Code, Limited Objection of U.S. Bank National Association, as Indenture Trustee, to Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 of the Bankruptcy Code, Objection of Wilmington Trust Company, as Indenture Trustee, to the Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 of the Bankruptcy Code, Noteholders' Objection to Motion to Reject Collective–Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113 and 1114, Objection to Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefit[s] Pursuant to Sections 1113 and 1114 of the Bankruptcy Code filed by Cliffs Natural Resources Inc. and Sureties' Reservation of Rights Regarding Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 of the Bankruptcy Code. In response to the various objections filed by the “other interested parties” as well as the UMWA's Objection, Debtors filed Omnibus Reply Memorandum of Law in Further Support of the Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 and the UMWA filed UMWA's Omnibus Reply Memorandum Regarding the Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113 and 1114. Also of note is that on April 2, 2013, as represented in this Court's April 5, 2013 Order, this Court granted the Motion to Intervene by the United Mine Workers of America 1974 Pension Trust and the United Mine Workers of America 1993 Benefit Plan in large part because of the contents of the 1113 Proposal at that time. Upon counsel's representation that the 1974 Pension Trust and the 1993 Benefit Plan cannot “independently grant concessions” and must “work with the bargaining parties that created these obligations in the first place,” ² the Court granted Debtors' oral motion to limit the participation of the 1974 Pension Trust and 1993 Benefit Plan going forward,³ in large part because these parties do not have the ability to negotiate which is an inherent component of Sections 1113 and 1114. Nevertheless, the Court also considers the Objection of the United Mine Workers of America 1974 Pension Trust and the United Mine Workers of America 1993 Benefit Plan to the Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 of the Bankruptcy Code as well as the Objection and Joinder of the United Mine Workers of America 2012 Retiree Bonus Account Plan to Objection of the UMWA 1974 and 1993 Plans to Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 of the Bankruptcy Code. The Court held hearings on this matter which commenced on April 29, 2013 and concluded on May 3, 2013. The matter was taken under submission. In accordance with the '30–day from the commencement of the hearing' constraint imposed by Congress as stated in Section 1113(d)(2), and because of the implicitly intertwined nature of the relief requested pursuant to Sections 1113 and 1114 in Debtors' Motion to Reject Collective Bargaining Agreements and to Modify Retiree Benefits Pursuant to 11 U.S.C. §§ 1113, 1114 of the Bankruptcy Code (hereinafter the “1113/1114 Motion”), the Court herein rules on the 1113/1114 Motion in its entirety.

I. INTRODUCTION

On July 9, 2012, Debtor Patriot Coal Corporation and a number of its affiliates (hereinafter collectively “Debtors”) filed Voluntary Petitions for relief under Chapter 11 of the Bankruptcy Code in the Southern District of New York. These Chapter 11 cases are being jointly administered pursuant to Federal Rule of Bankruptcy Procedure 1015(b) as well as the Joint Administration Order entered on July 10, 2012. Debtors are authorized to operate their businesses and manage their properties as Debtors In Possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. On December 19, 2012, the cases were transferred to the Bankruptcy Court for the Eastern District of Missouri following the Southern District of New York's Memorandum Decision entered on November 27, 2012, which instructed that the cases would be transferred.

As observed by the Bankruptcy Court for the Southern District of New York in the Memorandum Decision on Motions to Transfer Venue Pursuant to 28 U.S.C. § 1412, there is unquestionably no dispute that the lives and livelihoods of Debtors' employees, both union and non-union, current and retired, depend on the outcome of Debtors' reorganization. “The retirees' health and access to health care depend on the outcome of these cases. Indeed, without the dedication and sacrifice of the coal miners and their families, there would be no coal, and there would be no Patriot Coal.” In re Patriot Coal Corp., 482 B.R. 718, 722 (Bankr.S.D.N.Y.2012). There can be no Patriot Coal stock to dispute, or tonnage payments to negotiate, or companies to reorganize, unless there are men and women willing to bend their knees to excavate coal.

And, as the Bankruptcy Court for the Southern District of New York observed, and this Court now observes, this Court has been charged with applying the Bankruptcy Code and other applicable law to the facts and circumstances presented. The overarching goal for this Court is to guide Debtors through the Bankruptcy Code, particularly its Chapter 11 strictures,to maximize the value of Debtors' estates for the organized benefit of all stakeholders, including the United Mine Workers of America's (hereinafter the “UMWA”) constituents—the coal miners, employees, retirees and other beneficiaries that the UMWA represents—and guide Debtors to emerge from Chapter 11 as a financially and operationally stronger company. This Court has accepted both the privilege and responsibility of this task and undoubtedly has been weighing the intellectual scales of the matter presented, inexorably to this purpose—this Memorandum Decision and Order.

As of the date of entry of this Memorandum Decision and Order, this Court has received over 900 letters from interested parties, all of which have been read by the Court and placed on the record as correspondence. Many of these letters discuss the imminence of bankruptcy cases for retired coal miners and their families should Debtors be permitted to modify the Collective Bargaining Agreements (hereinafter “CBA” or “CBAs”) and the Retiree Benefits. Many discuss the horrendous...