A judge has apparently denied a proposal to shift Blackjewel, LLC's bankruptcy from reorganization to liquidation, a shift that would have allowed the coal company to dodge its responsibility to clean up abandoned mines and pay workers' compensation for medical bills. On Nov. 25, Blackjewel lawyers motioned to convert the bankruptcy from Chapter 11 to Chapter 7. "That would mean that instead of exiting bankruptcy as a new company with less debt, Blackjewel L.L.C. would effectively cease to exist," Sydney Boles reports for Ohio Valley ReSource.
"Blackjewel had 1,100 employees at its Appalachian mines and about 600 at surface-mining operations in Wyoming," The Lane Report reports. "At the time of its bankruptcy filing, Blackjewel owed about $146 million in unpaid taxes and also owed workers unpaid wages and retirement funding." The company made national headlines in 2019 after laid-off miners in Harlan County, Kentucky, blocked a coal train from leaving for months because the bankrupt company had not paid them for recent work.
Dec. 17 was the deadline to file objections to the company's plan to liquidate. A wide range of environmental and community groups did so, along with the Kentucky Energy and Environment Cabinet, the U.S. Internal Revenue Service and federal creditors, Matt Hepler and Molly Moore report for The Appalachian Voice. At a hearing that day, Judge Benjamin Kahn denied Blackjewel's motion to shift to Chapter 7.
It's "pretty common" for companies to shift to Chapter 7 "when they're struggling like Blackjewel is," University of Chicago School of Law assistant professor and coal bankruptcy expert Joshua Macey told Boles.
One reason Blackjewel may have been struggling so much: its former CEO, Jeff Hoops, was allegedly defrauding the company. Blackjewel lawyers filed a civil suit against Hoops on Dec. 10, accusing Hoops of making tens of millions of dollars in fraudulent transactions, Boles reports.
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