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December 30, 2015 at 05:13 AM
(Bloomberg) — Walter Energy Inc. can scrap its union obligations to facilitate a sale, a move that will affect multi-employer funds covering health and retirement benefits for thousands of former miners but may allow the company to keep operating.
After two days of hearings, U.S. Bankruptcy Judge Tamara O. Mitchell in Birmingham, Ala., found that the company’s assets can be sold without the liabilities associated with union benefits. She rejected objections by funds that are responsible for paying retiree and health benefits to former miners from Walter and other companies.
See also: Retirees could lose their ‘guaranteed’ health-care benefits
“This court finds that maintaining the coal operations as a going concern, keeping the mines open, offering future job opportunities and continuing to be a productive member of the business community all require this court to overrule” the objections, Mitchell said in an opinion filed Monday. She said that she assumed an offer to buy the company wouldn’t go forward without such a ruling.
Walter Energy filed for bankruptcy in July and is set to put its assets up for auction Jan. 5. As an opening bid, lenders who banded together as Coal Acquisition LLC have offered to exchange $1.25 billion of debt and pay $5.4 million in cash.
Coal, gas
The proposed sale is for the Alabama coal operations, which includes mines, methane gas operations and a coke plant.
The agreement hinged on a resolution with unions or court permission to reject the collective-bargaining agreements. Walter pays about $25 million to $35 million a year for retiree benefits, according to court papers. The labor agreement with the steelworkers, which covered about 120 employees, expired on Dec. 6.
The funds said the move would spark a $1 billion liability and further erode their already precarious financial position. The 1974 pension plan said it provides benefits to 89,000 retired or disabled coal workers or surviving spouses who are threatened by the move.
