In re Patriot Coal Corp.

Decision Date27 November 2012
Docket NumberNo. 12–12900 (SCC).,12–12900 (SCC).
Citation482 B.R. 718
PartiesIn re PATRIOT COAL CORPORATION, et al., Debtors.
CourtU.S. Bankruptcy Court — Southern District of New York

OPINION TEXT STARTS HERE

Davis Polk & Wardwell LLP, By: Marshall S. Huebner, Esq., Elliott Moskowitz, Esq., Damian S. Schaible, Esq., Michelle M. McGreal, Esq., New York, NY, for Debtors.

United States Department of Justice, By: Tracy Hope Davis, Esq., Andrea B. Schwartz, Esq., Susan D. Golden, Esq., New York, NY, Office of the United States Trustee.

Kennedy, Jennik & Murray, P.C., By: Susan M. Jennik, Esq., Serge Ambroise, Esq., New York, NY, for United Mine Workers of America.

Stites & Harrison PLLC, By: W. Blaine Early, III, Esq., William T. Gorton, III, Esq., Lexington, KY, Brian H. Meldrum, Esq., Louisville, KY, for Surety Movants.

Kramer Levin Naftalis & Frankel LLP, By: Thomas Moers Mayer, Esq., Adam Rogoff, Esq., New York, NY, for Official Committee of Unsecured Creditors.

Weil Gotshal & Manges LLP, By: Marcia L. Goldstein, Esq., Joseph H. Smolinsky, Esq., New York, NY, for Citibank and Barclays, First–Out DIP Agent.

Willkie Farr & Gallagher LLP, By: Margot B. Schonholtz, Esq., Ana M. Alfonso, Esq., New York, NY, for Bank of America N.A., Second–Out DIP Agent.

Andrews Kurth LLP, By: Paul N. Silverstein, Esq., Jeremy B. Reckmeyer, Esq., New York, NY, for Wilmington Trust Company.

Brown Rudnick LLP, By: Robert J. Stark, Esq., New York, NY, for Ad Hoc Consortium of Senior Noteholders.

Buchanan Ingersoll & Rooney PC, By: Kristi A. Davidson, Esq., New York, NY, for Caterpillar Inc., Caterpillar Financial Services Corporation, and Caterpillar Global Mining LLC.

Morgan, Lewis & Bockius LLP, By: John C. Goodchild, III, Esq., Philadelphia, PA, for UMWA Health and Retirement Funds.

McKool Smith, By: Michael R. Carney, Esq., New York, NY, for Certain Interested Shareholders.

Jones Day, By: Carl E. Black, Esq., Cleveland, OH, for Peabody Energy Corporation.

United Mine Workers of America, By: Grant Crandall, Esq., Triangle, VA.

Commonwealth of Kentucky, By: Michael P. Wood, Esq. (telephonically), Frankfort, KY, for Department for Natural Resources.

MEMORANDUM DECISION ON MOTIONS TO TRANSFER VENUE PURSUANT TO 28 U.S.C. § 1412

SHELLEY C. CHAPMAN, Bankruptcy Judge.

+-----------------+
                ¦TABLE OF CONTENTS¦
                +-----------------¦
                ¦                 ¦
                +-----------------+
                
+----------------------------------+
                ¦PROCEDURAL HISTORY            ¦722¦
                +------------------------------+---¦
                ¦                              ¦   ¦
                +------------------------------+---¦
                ¦FINDINGS OF FACT              ¦726¦
                +------------------------------+---¦
                ¦                              ¦   ¦
                +----------------------------------+
                
+---------------------------------------------------+
                ¦I. ¦The Commencement of the Cases             ¦726 ¦
                +---+------------------------------------------+----¦
                ¦   ¦                                          ¦    ¦
                +---+------------------------------------------+----¦
                ¦II.¦The Debtors' Business and Operations      ¦728 ¦
                +---------------------------------------------------+
                
+--------------------------------------------------+
                ¦   ¦A.¦Formation and Domicile of the Debtors ¦728 ¦
                +---+--+--------------------------------------+----¦
                ¦   ¦B.¦The Debtors' Operations               ¦729 ¦
                +--------------------------------------------------+
                
+-------------------------------------------------------------------+
                ¦    ¦                                                       ¦      ¦
                +----+-------------------------------------------------------+------¦
                ¦III.¦The Debtors' Management and Board of Directors         ¦730   ¦
                +-------------------------------------------------------------------+
                
+------------------------------------------+
                ¦  ¦A.¦The Debtors' Management        ¦730 ¦
                +--+--+-------------------------------+----¦
                ¦  ¦B.¦Patriot's Board of Directors   ¦730 ¦
                +------------------------------------------+
                
+------------------------------------------------------------------------+
                ¦    ¦                                                           ¦       ¦
                +----+-----------------------------------------------------------+-------¦
                ¦IV. ¦The Debtors' Prepetition and Postpetition Capital Structure¦731    ¦
                +------------------------------------------------------------------------+
                
+------------------------------------------+
                ¦  ¦A.¦Prepetition Capital Structure  ¦731 ¦
                +--+--+-------------------------------+----¦
                ¦  ¦B.¦The DIP Facilities             ¦731 ¦
                +------------------------------------------+
                
+---------------------------------------------------------------+
                ¦    ¦                                                    ¦     ¦
                +----+----------------------------------------------------+-----¦
                ¦V.  ¦Parties–in–Interest in the Debtors' Chapter 11 Cases¦732  ¦
                +---------------------------------------------------------------+
                
+--------------------------------------------------------+
                ¦   ¦A. ¦The Debtors' Material Contracts and Leases¦732  ¦
                +---+---+------------------------------------------+-----¦
                ¦   ¦B. ¦The Debtors' Current and Former Employees ¦734  ¦
                +---+---+------------------------------------------+-----¦
                ¦   ¦C. ¦The Debtors' Creditors and Claimholders   ¦734  ¦
                +--------------------------------------------------------+
                
+-------------------------------------------------------+
                ¦   ¦                                             ¦     ¦
                +---+---------------------------------------------+-----¦
                ¦VI.¦Commencement of the Debtors' Chapter 11 Cases¦735  ¦
                +-------------------------------------------------------+
                
+----------------------------------+
                ¦                              ¦   ¦
                +------------------------------+---¦
                ¦DISCUSSION                    ¦736¦
                +------------------------------+---¦
                ¦                              ¦   ¦
                +----------------------------------+
                
+----------------------------------------------------------------------------+
                ¦I.  ¦The Bankruptcy Venue Statute—28 U.S.C. § 1408                  ¦736    ¦
                +----+---------------------------------------------------------------+-------¦
                ¦    ¦                                                               ¦       ¦
                +----+---------------------------------------------------------------+-------¦
                ¦II. ¦Transfer of Venue Pursuant to 28 U.S.C. § 1412                 ¦738    ¦
                +----+---------------------------------------------------------------+-------¦
                ¦    ¦                                                               ¦       ¦
                +----+---------------------------------------------------------------+-------¦
                ¦III.¦The Debtors' Cases Must be Transferred from this District      ¦741    ¦
                ¦    ¦Pursuant to 28 U.S.C. § 1412                                   ¦       ¦
                +----------------------------------------------------------------------------+
                
+----------------------------------------------------------------------------+
                ¦    ¦A.  ¦The Debtors Did Not Act in Bad Faith in Filing in this    ¦742    ¦
                ¦    ¦    ¦District                                                  ¦       ¦
                +----+----+----------------------------------------------------------+-------¦
                ¦    ¦B.  ¦The Debtors' Literal Compliance with Section 1408         ¦743    ¦
                +----+----+----------------------------------------------------------+-------¦
                ¦    ¦C.  ¦The Applicability of the Winn–Dixie   Decision          ¦745    ¦
                +----+----+----------------------------------------------------------+-------¦
                ¦    ¦D.  ¦Administrative Efficiency and the Convenience of the      ¦746    ¦
                ¦    ¦    ¦Parties                                                   ¦       ¦
                +----+----+----------------------------------------------------------+-------¦
                ¦    ¦E.  ¦The Limited Scope of the Court's Ruling                   ¦748    ¦
                +----------------------------------------------------------------------------+
                
+----------------------------------------------------------------------------+
                ¦    ¦                                                               ¦       ¦
                +----+---------------------------------------------------------------+-------¦
                ¦    ¦Neither the Interest of Justice nor the Convenience of the     ¦       ¦
                ¦IV. ¦Parties Compels Transfer of the Patriot Cases to the Southern  ¦749    ¦
                ¦    ¦District of West Virginia                                      ¦       ¦
                +----+---------------------------------------------------------------+-------¦
                ¦    ¦                                                               ¦       ¦
                +----+---------------------------------------------------------------+-------¦
                ¦V.  ¦The Patriot Cases Shall be Transferred to the United States    ¦753    ¦
                ¦    ¦Bankruptcy Court for the Eastern District of Missouri          ¦       ¦
                +----------------------------------------------------------------------------+
                
+----------------------------------+
                ¦                              ¦   ¦
                +------------------------------+---¦
                ¦CONCLUSION                    ¦755¦
                +----------------------------------+
                

The narrow question before the Court is deceptively simple—should the chapter 11 cases of Patriot Coal Corporation and its ninety-eight affiliated debtors be transferred to another district? The broader question before the Court, however, is dauntingly complex—what is justice? In order to answer the narrow question the Court must attempt to answer the broader question and give meaning to the “interest of justice” test for venue transfer set forth in 28 U.S.C. § 1412. This decision will thus address not only the relatively scant case law on venue transfer in large bankruptcy cases but will also examine the historical basis of the concept of venue; the decades-old controversy surrounding the domicile/affiliate rule; and, last but not least, the meaning of justice in the context of the Patriot cases.

It is of utmost importance to note at the outset what is unquestionably not in dispute in these cases: the critical importance of Patriot Coal to its employees—union and non-union alike—and its retirees, as well as their thousands of dependents. The employees' lives and livelihoods depend on the outcome of these...

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28 cases
  • In re Patriot Coal Corp.
    • United States
    • U.S. Bankruptcy Court — Eastern District of Missouri
    • 29 Mayo 2013
    ...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......
  • In re Mission Coal Co.
    • United States
    • U.S. Bankruptcy Court — Northern District of Alabama
    • 1 Marzo 2019
    ...Rule of Bankruptcy Procedure 9014. 3. In re Patriot Coal Corp., 493 B.R. 65, 78 (Bankr. E.D. Mo. 2013) (quoting In re Patriot Coal Corp., 482 B.R. 718, 722 (Bankr. S.D.N.Y. 2012). 4. Patriot Coal, 493 B.R. at 78. 5. Pursuant to Rule 201 of the Federal Rules of Evidence, the Court may take j......
  • Think3 Litig. Trust v. Zuccarello (In re Think3, Inc.)
    • United States
    • U.S. Bankruptcy Court — Western District of Texas
    • 4 Enero 2015
    ...2013) (transferring venue of adversary proceeding to the district where underlying bankruptcy case is pending); In re Patriot Coal Corp., 482 B.R. 718, 739 (Bankr.S.D.N.Y.2012). Accordingly, there is a presumption that this Court—the U.S. Bankruptcy Court for the Western District of Texas w......
  • In re Walter Energy, Inc.
    • United States
    • U.S. Bankruptcy Court — Northern District of Alabama
    • 28 Diciembre 2015
    ...as noted on the record in open court.3 In re Patriot Coal Corp., 493 B.R. 65, 78 (Bankr.E.D.Mo.2013) (quoting In re Patriot Coal Corp., 482 B.R. 718, 722 (Bankr.S.D.N.Y.2012).4 Patriot Coal, 493 B.R. at 78.5 Pursuant to Rule 201 of the Federal Rules of Evidence, the Court may take judicial ......
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2 firm's commentaries
  • Notable Business Bankruptcy Decisions Of 2012
    • United States
    • Mondaq United States
    • 12 Febrero 2013
    ...and ordered venue of the cases to be transferred to another district after the effective date of the plan. In In re Patriot Coal Corp., 482 B.R. 718 (Bankr. S.D.N.Y. 2012), the court held that the debtor parent company's incorporation of two subsidiaries in New York shortly before its bankr......
  • Chapter 11 Venue: The Interest Of Justice
    • United States
    • Mondaq United States
    • 10 Abril 2013
    ...a different bankruptcy court "in the interest of justice" and for the "convenience of the parties." Recently, in In re Patriot Coal Corp., 482 B.R. 718 (Bankr. S.D.N.Y. 2012), a bankruptcy judge applied section 1412 to transfer the Chapter 11 venue of one of the largest coal companies in th......
2 books & journal articles
  • NCBJ Special Committee on Venue: Report on Proposal for Revision of the Venue Statute in Commercial Bankruptcy Cases.
    • United States
    • 22 Diciembre 2019
    ...Report, supra note 75, at 13. (151) Venue Fairness, supra note 75. See also Minnesota Bar Association Report, supra note 75, at 21. (152) 482 B.R. 718 (Bankr. S.D.N.Y. (153) Id. at 734. (154) Venue Fairness, supra note 75. (155) Id. See also Minnesota Bar Association Report, supra note 75, ......
  • Chapter 11's Descent into Lawlessness.
    • United States
    • American Bankruptcy Law Journal Vol. 96 No. 2, March 2022
    • 22 Marzo 2022
    ...(stating Belk's principal place of business). (36) See 11 U.S.C. [section] 101(2) (defining "affiliate"). (37) In re Patriot Coal Corp., 482 B.R. 718, 727 (Bankr. S.D.N.Y. 2012) ("Pursuant to an assumption agreement, effective [thirteen days earlier, PCX, Patriot's newly formed subsidiary] ......

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