Blackjewel plans to sell coal mines in two states. KY workers still haven’t been paid.
A major Kentucky coal producer that declared bankruptcy earlier this month received court approval Friday to move forward with the potential sale of mines and equipment in Wyoming and West Virginia in hopes of preventing the company’s collapse.
As part of the deal, Blackjewel LLC., which employed about 1,100 miners in Kentucky, Virginia and West Virginia, will also receive an $8..1 million loan from a potential buyer.
None of that money will be used to pay the hundreds of Kentucky workers who are owed for weeks of work after the company’s checks bounced or were clawed back earlier this month. It remains unclear whether Blackjewel will eventually be able to re-open its Kentucky mines.
The company said in court filings that the sale was the only way to prevent the company from filing for Chapter 7 bankruptcy, which would push it to sell all of its mines and other assets.
It found a potential buyer in Contura Energy, which offered $20.6 million for two large surface mines in Wyoming and the Pax Surface Mine in West Virginia. Other companies will be allowed to bid on those mines and other assets
Contura received approval Friday to wire $8.1 million to Blackjewel to allow the company to operate during the bidding process. If no other companies issue bids, Contura will send an additional $12.5 million to purchase the mines and assets.
Of the $8.1 million loan, $2 million will be set aside to cover attorneys fees.
Sam Petsonk, an attorney who filed a class action suit Thursday on behalf of miners in Kentucky, Virginia and West Virginia, asked during Friday’s hearing that about half of the $2 million be used to pay workers whose checks bounced.
The judge denied that request.
“They’re getting paid up to $2 million and the miners, the non-returning miners, don’t get to share any of these proceeds,” Petsonk said.
Petsonk said Friday’s court proceedings and the approved bidding process in West Virginia and Wyoming still largely leave other workers in Central Appalachia in the dark.
While the deal should leave Blackjewel with more money that it could use to pay workers, the company has expressed no indication that it plans to pay employees who won’t return to work if the mines are to re-open.
“We don’t really know if many or possibly even any of the miners in the eastern part of the country will get to go back to work as a result of this,” Petsonk said. “Nothing is certain right now.”
As part of the court-approved order Friday, Blackjewel plans to terminate its 401(k) retirement plan, which would allow employees to withdraw money from their 401(k) accounts. Blackjewel will be required to notify 401(k) holders as that process continues.
Though workers will be allowed to withdraw money from those accounts, withdraws would come with a penalty of 10 percent for workers younger than 59 and a half.
Petsonk asked the judge to continue the 401(k) plan but allow workers to access it using “hardship withdrawals,” which would eliminate that penalty in some cases, but the judge denied the request.
Frank Volk, a U.S. Bankruptcy Court judge in the Southern District of West Virginia, said he believed miners needed immediate access to their 401(k) accounts, and that the termination of the 401(k) plan was the most effective way to accomplish that.
Many Kentucky miners have said Blackjewel was not making proper 401(k) contributions in the weeks prior to its bankruptcy filing. Petsonk’s class action suit is seeking those contributions and penalties for alleged 401(k) violations.
The suit alleges the company did not contribute to their 401(k) accounts as promised at times before filing for bankruptcy protection, then told employees they couldn’t get access to their 401(k) accounts because they hadn’t been terminated, even though that is not a condition of tapping into those accounts.
The suit also seeks back wages and other damages on behalf of nearly 1,100 employees in Kentucky, Virginia and West Virginia. It alleges the companies violated the states’ wage laws and failed to give them 60 days’ notice of the layoffs as required by federal law.
In addition, the suit challenges the claim that the companies are actually bankrupt because Lexington Coal Company, which is controlled by Jeff Hoops Sr., the former CEO of Blackjewel, continues to operate and “derive substantial revenue.”
Petsonk said Lexington Coal Company was deeply tied to Blackjewel and helped employ the workers at Blackjewel mines, so it and Hoops should also be held liable for the wages of its workers.
“We don’t know exactly how much wealth is located in that company,” Petsonk said. “When they may still have cash on hand within companies that were basically integrated with these debtors — these companies that have filed for bankruptcy — those other corporate entities and the individuals who control them should share their profits.”
This story was originally published July 26, 2019 at 3:37 PM.
