Patriot Coal seeks court authorization to modify retiree benefit plan

By Mark Reccek

Bethlehem, Pa., Sept. 22 – Patriot Coal Corp. requested court approval to authorize, but not direct, the company to modify certain retiree benefits and implement the terms of the proposal, according to a motion filed Monday with the U.S.Bankruptcy Court for the Eastern District of Virginia.

According to the motion, the company’s payments for the retiree benefits can no longer be sustained. The company specifically cites the retiree benefit obligations, along with external pricing pressure, increased regulation and other costs associated with the company’s businesses as reasons it can no longer sustain itself and operate profitably.

The company’s proposal includes:

• On account of obligations to retirees that are not Peabody assumed retirees and retirees who are not Heritage/Squaw Creek retirees, the company will contribute $1 million in cash to the retiree committee;

• The non-union voluntary employee beneficiary association will receive an allowed non-priority unsecured claim for the non-union benefits that have accrued as of the petition date in an amount to be determined in consultation with the retiree committee, which general unsecured claim will be afforded the treatment set forth in the debtors’ confirmed plan of reorganization;

• Each participant of the pre-March 1990 plan will receive an allowed non-priority unsecured claim for the benefits that have accrued as of the petition date in an amount to be determined in consultation with the retiree committee, which general unsecured claim will be afforded the treatment set forth in the debtors’ confirmed plan of reorganization;

• With respect to the Peabody assumed retirees, the retiree committee will establish a voluntary employee beneficiary association to be established by the retiree committee;

• The company will cease providing benefits to the long-term disability participants and grant each retiree an allowed non-priority unsecured claim for the benefits that have accrued as of the petition date in an amount to be determined in consultation with the retiree committee; and

• The company will continue satisfying its obligations under COBRA until the date of termination of all group health plan coverage for all active employees and retirees, resulting in the termination of coverage for existing COBRA qualified beneficiaries who elect to receive continuation coverage rights.

“As set forth in more detail below, the debtors respectfully submit that the proposal is necessary to permit confirmation of the debtors’ Chapter 11 plan, is based on the most complete and reliable information at the time the proposal was made, does not treat the debtors or their creditors unfairly or inequitably and has been rejected by the retiree committee without good cause,” the motion said.

Patriot Coal, a Richmond, Va.-based miner, producer and seller of thermal coal, filed for bankruptcy on May 12. The Chapter 11 case number is 15-32450.

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