Following a court hearing Tuesday, a major Kentucky coal producer that filed for Chapter 11 bankruptcy protection in June is poised to sell virtually all of its assets, including mines that together employ nearly 700 workers.
Gregory Schaaf, a judge for the U.S. Bankruptcy Court in the Eastern District of Kentucky, said during the hearing that he would approve a sale order filed by Cambrian Coal, LLC, which was operated by former University of Kentucky Board of Trustees member Jim Booth until he resigned less than two weeks before the company filed for bankruptcy.
Following the sale, Cambrian will transfer millions of dollars of reclamation fees and employee obligations to three groups of companies: Richmond Hill, which includes Richmond Hill Capital Partners and Alliance Prime Associates, Inc.; American Resources Corporation; and Pristine Energy, LLC.
Cambrian is one of three major coal producers in Kentucky to file for Chapter 11 bankruptcy this year, along with Blackjewel, LLC and Blackhawk Mining, LLC. Both Cambrian and Blackhawk have continued to operate their mines and pay employees during their bankruptcies, while Blackjewel made headlines for failing to pay hundreds of employees for weeks of work.
Still, a number of creditors and lease holders have criticized Cambrian throughout the sale process, with one creditor calling the bidding procedures “rushed, secretive and apparently uncompetitive.”
According to an affidavit from a financial advisor to Cambrian, the company received just five bid proposals that offered to buy a significant amount of the company’s assets. It invited just three companies to its official auction last week.
Cambrian plans to sell its assets in three major blocks, with American Resources buying mines in Perry County, Richmond Hill buying the Clintwood Elkhorn mines in Pike County and western Virginia, and Pristine buying the Premier Elkhorn mines in Pike County.
According to the financial advisor’s affidavit, the sale to Richmond Hill will bring payments totaling more than $11 million, along with a $15 million credit bid and the transfer of $59 million of reclamation obligations.
The other two sales would also transfer millions of dollars in reclamation obligations, along with combined obligations to employees totaling $1.4 million, but do not include any upfront cash payments.
It is unclear whether the purchasing companies will continue to mine coal at the current rate, and whether they will retain all of the current Cambrian employees. Attorneys representing the three companies did not immediately respond to requests for comment.
According to the affidavit, which was filed Tuesday, Cambrian has struggled to meet operating expenses and make payroll in recent weeks.
Without a $2 million deposit from Richmond Hill, which it gave to Cambrian as part of the bidding process, Cambrian would not have been able to make its most recent payroll.
“Based on current projections of cash flow, (Cambrian’s) ability to continue operations beyond this week is highly uncertain,” the advisor wrote.
Without the sale, the company would have been forced to shut down its operations and could not have afforded to pay employees, according to the affidavit.
Among Cambrian’s creditors are a number of companies tied to Booth, the former CEO and former UK board trustee, including Southeastern Land, LLC., and Mayo Resources, Inc.
According to court filings, Booth’s other companies continued to do business with Cambrian up until the bankruptcy petition, racking up $17 million in debt to Booth’s other companies.
The company also owes millions to several other companies, including $1.15 million to American Electric Power, and $2.74 million to Parsley’s General Tire, Inc., in London, Ky.
According to an article in the Appalachian News-Express earlier this month, the company also owes more than $190,000 to Pike County in delinquent property taxes for 2018.