Blackhawk Mining, LLC., a coal company with 2,800 employees in Kentucky and West Virginia, plans to file for Chapter 11 bankruptcy later this week, according to documents released by the company.
Blackhawk, based in Lexington, said in its proposed filings that the company has enough revenue to continue operating its mines during the bankruptcy and that it does not anticipate layoffs as a result of the reorganization. The announcement marks the latest in a string of bankruptcy cases from coal companies active in Eastern Kentucky.
Meanwhile, Kentucky Attorney General Andy Beshear released a letter Tuesday asking the Office of the United States Trustee for “the immediate payment” of hundreds of Kentucky miners left out-of-work by the recent bankruptcy of Blackjewel, LLC, another major coal producer.
In that case, employees of Blackjewel had their paychecks removed from their bank accounts earlier this month. Another check, due this past Friday, never came. That left miners and their families with overdrawn bank accounts and uncertainty over their finances.
On Monday, a prominent Lexington priest traveled to Harlan to pay the electric bills of about 200 of those miners.
Beshear co-signed the letter with Virginia Attorney General Mark Herring. Together, they asked the trustee to ensure that all Blackjewel workers, not just those who may eventually be called back to the mines, receive payment for the days they have already worked.
“The failure of Blackjewel to prepare for bankruptcy has created unnecessary chaos for our miners and their families — the uncertainty they have had to face is wrong and it must end,” Beshear said. “My office is using all our powers to seek answers to the complaints we have received regarding clawed back paychecks, bounced checks and child support issues.”
“No Kentuckian should be treated this way for putting in an honest day’s work,” he said.
Blackhawk, in a news release, said its bankruptcy proceedings should be completed within 60 days of filing — it plans to officially file for bankruptcy Friday in the U.S. Bankruptcy Court of Delaware.
The company operates 19 active underground mines and six active surface mines in Kentucky and West Virginia, including mines in Perry, Knott, Breathitt and Leslie counties.
In 2018, Blackhawk produced about 13 millions tons of coal and generated $1.09 billion in revenue, according to company documents.
Blackhawk was founded in 2010 and expanded by buying up active coal reserves and mining operations in the wake of other coal companies’ Chapter 11 bankruptcies. Its primary focus eventually shifted to metallurgical coal, which is used for making steel and is viewed as a scarce global commodity, according to the company.
That strategy allowed Blackhawk to emerge as one of the largest producers of metallurgical coal in the nation, but forced the company to take on massive amounts of debt, “anticipating that the pricing environment in the metallurgical coal market would improve starting in late 2015.”
Prices did improve, but not until late 2016. By that time, the company had permanently closed 10 mines and sold off much of its inventory of spare equipment and parts.
Its anticipated bankruptcy would allow the company to restructure its debt, and receive $50 million of new financing.
“Blackhawk has sufficient liquidity to continue normal mining operations and to meet its obligations in the ordinary course,” the company said in a news release. “This includes funding employee wages and benefits, paying vendors and suppliers for all goods and services, and providing customers the same high-quality products and outstanding service they have come to expect from Blackhawk.”
The anticipated bankruptcy will mark the third major Kentucky coal producer to file for Chapter 11 since mid-June. A number of other large companies, including Alpha Natural Resources and Peabody Energy, have also fallen into bankruptcy in recent years.
According to a 2017 report from the U.S. Department of Energy, the biggest contributor to the decline of coal power plants has been cheap competition from natural gas. In 2016, for the first time, natural gas overtook coal as the largest source of electricity generation in the U.S.
Low growth of electricity demand has also contributed to coal’s decline, as have increased investments required to comply with stricter environmental regulations.
The report also cited the Environmental Protection Agency’s Clean Power Plan, which was rolled back earlier this year by the administration of President Donald Trump and replaced with the more-lenient Affordable Clean Energy rule.
Still, Trump’s own Department of Energy concluded that competition from natural gas, rather than environmental regulation administered under President Barack Obama, is the chief culprit in coal’s decline.
In Kentucky, coal employment has remained stagnant since Trump took office in January 2017, according to the most recent report from the state Energy and Environment Cabinet.
Employment in Eastern Kentucky plummeted from about 13,700 in 2011 to just 4,000 in 2017. In the first quarter of 2019, there were about 3,960 coal jobs in Eastern Kentucky.