Murray Energy Bankruptcy Plan Approved Over Creditor Objections
By Alex Wolf
September 1, 2020 - Coal giant Murray Energy Corp. won approval to wind down in bankruptcy by selling its business as a going concern to a lender group that includes Bain Capital Credit LP.
The Chapter 11 plan, approved by Judge John E. Hoffman Jr. of the U.S. Bankruptcy Court for the Southern District of Ohio during a telephonic hearing Monday, had faced a handful of objections raised by creditors and the Department of Justice.
Murray Energy, the largest privately owned U.S. coal company, won court approval to wind down in bankruptcy by selling its business to a lender group.
Photographer: Luke Sharrett, Bloomberg via Getty Images
The nation’s largest private coal producer, founded in 1988 by outspoken Trump supporter Robert Murray, is poised to continue operating under the ownership of the lender group, which also includes Eaton Vance Management, Silver Point Capital LP, and others.
The purchasers will forgive $1.2 billion in debt as part of the deal and use a $45 million loan from Silver Capital to finance a Chapter 11 exit. The sale and restructuring allow the company to shed more than $8 billion of debt and legacy liabilities, according to court filings.
“I am particularly pleased that this case resulted in the preservation of jobs,” Hoffman said.
Murray’s bankruptcy plan came under fire from a number of creditors, including term loan lender Black Diamond Commercial Finance LLC, which disputed how funds would be distributed among creditor groups.
Finding that Black Diamond’s objection “lacks merit,” Hoffman noted that the lender is projected to recover about 66% on its claims, while unsecured creditors stand to recover less than 0.1% on theirs. The judge also rejected challenges raised by holders of disputed mechanic liens claims, finding they can continue to press for enhanced treatment.
Hoffman also overruled an objection raised by the DOJ’s bankruptcy watchdog, the U.S. Trustee, over the inclusion of broad exculpatory provisions for professionals involved in the Chapter 11 case. The judge said the provisions are appropriate and that the court has authority to approve them.
Murray’s plan confirmation hearing began last week and was put on track for final resolution thanks to a settlement announced Aug. 28 between the company and Consol Energy Inc., a rival coal producer that sold certain mining operations to Murray in 2013.
The company’s Chapter 11 plan is the product of several agreements, including a $15 million settlement with the Murray family over allegations of improper payments and a deal with the United Mine Workers of America for a new collective bargaining agreement.
Murray filed for bankruptcy in October with more than $2.7 billion of debt.
The case is In re Murray Energy Holdings Co., Bankr. S.D. Ohio, No. 19-56885, hearing 8/31/20.