A bankrupt coal company confirmed during a court hearing Saturday that many Kentucky miners will not be reimbursed for clawed-back paychecks until the company can resume its normal operations.
Employees of Blackjewel LLC, which employs about 1,100 people in Kentucky, Virginia and West Virginia, were last paid Friday, June 28, but had their paychecks pulled from their bank accounts Monday, July 1.
That left many miners who had already paid bills on June 28 and over the weekend with overdrawn accounts and concerns over their finances.
During Saturday’s hearing, Travis McRoberts, an attorney representing Blackjewel, said the company hopes to secure additional financing in the coming days to bring back some of its employees for security and other “critical functions.”
The company does not have the financing to reimburse the rest of its employees for the clawed-back checks.
The loss of the miners’ last paycheck is having an impact on miners and their families.
Melissa Cole, a Letcher County woman whose husband worked at a Blackjewel mine near Cumberland in Harlan County, said she got her hopes up that the hearing today would bring some resolution. It’s frustrating that there wasn’t one.
“Everyone is just in limbo,” Cole said. “No one knows what to do.”
People are getting deeper in the hole the longer they go without money, Cole said.
Her account was initially overdrawn $1,088 when the bank first clawed back the money, but more checks she wrote have come in since, so her negative balance is growing. Cole and her husband had their daughter buy them a gallon of milk Friday, and may need to rely on her for more help.
Cole said some miners use a check-cashing business in Harlan County to cash their paychecks, and there has been a concern that they could have criminal charges for cashing what turned out to be cold checks.
Court documents show the coal company knew there wasn’t money in the bank to cover the June 28 checks issued to employees in Kentucky, but instead hoped to get money the week of July 1 to cover the checks.
“To me, that’s straight-up fraud,” Cole said.
Billie Jean Brassfield, whose husband, David, works at a Blackjewel underground mine near Cumberland, said she and her husband sold their pontoon boat and some tools Friday so they could avoid being overdrawn on their mortgage and vehicle payments, and to avoid facing overdraft fees.
“We had to do something in order to get some money,” she said.
Brassfield’s husband’s check for $2,000 has not been replaced. Miners have not been given any timeline on when they can go back to work, or when they will be paid back, she said.
“We still have nothing,” she said.
There is also concern that the coal company didn’t put all payroll deductions into employees’ health savings accounts. There is less money in their account than there should be, Brasssfield said.
McRoberts provided no timeline on when the company would resume normal operations, or on how many employees will be able to return to work in the coming days.
Frank Volk, a federal judge in the Southern District of West Virginia, made no order Saturday on the payment of those workers.
“We know this is not the news you had hoped for, nor is it the result that the management is working towards,” Blackjewel said in a statement to its employees. “We assure you that management is doing everything it can to obtain financing to resume normal operations. Once this financing is obtained and operations are resumed, we plan to pay all prepetition amounts due to these employees at that time.”
When the company issued checks June 28, the company believed it would be able to secure financing by the time it filed for Chapter 11 bankruptcy on July 1, McRoberts said.
That financing plan fell through, and left the company unable to fund the checks it had already distributed.
Some miners and their wives had already deposited their checks and paid bills, but on Monday they found that their banks had withdrawn the full amount of the checks.
This week, Blackjewel secured a $5 million loan that will allow it to stave off Chapter 7 bankruptcy — and the liquidation of its assets — but that money will not be used to reimburse employees for the clawed-back paychecks.
That loan came on the condition that Jeff Hoops, Blackjewel’s former CEO, step down. David Beckman, a senior managing director at FTI Consulting, took his place as interim CEO and Chief Restructuring Officer.
Blackjewel and its affiliated companies are one of the largest coal producers in the nation, with 1,100 employees in the East and an additional 600 workers at two surface mines in the western U.S.
According to the company’s statement, Blackjewel plans to eventually resume normal operations and reopen its mines in Kentucky and elsewhere, but the company gave no specific timeline.
“To be perfectly clear: the company is fully committed to securing the additional financing necessary to resume normal operations and to bring our employees back to work as quickly as possible,” Blackjewel said in its statement.
In a news release Friday , Kentucky Attorney General Andy Beshear said his office has received numerous complaints about Blackjewel “ranging from clawed back paychecks to child support issues.”
“I have therefore instructed my office to use all of its powers and resources to seek answers for those who have been harmed,” said Beshear, the Democratic nominee for governor. “No Kentuckian should put in an honest day’s work only to have their paycheck taken away and their livelihood disrupted.”
McRoberts said Blackjewel’s management are working “more or less around the clock” to get employees back to work and return the company to its normal operations.
“We are very sensitive to the hardship this has created for people,” McRoberts said.