Deal could mean money for former miners at Blackjewel coal in KY, other states
Hundreds of former employees of bankrupt coal company Blackjewel in Kentucky and other states could receive payments under a proposal filed Tuesday.
The agreement would settle claims that the company didn’t give workers the required notice that they would be laid off before it filed for bankruptcy more than a year ago.
The settlement won’t be final until a judge approves it. Attorneys for the company asked for a hearing on the proposal Oct. 9.
It isn’t clear that Blackjewel has the money to fully fund the settlement, but attorneys representing the miners said they will push hard for money for the miners.
“Rest assured, many people will be working to see that these monies be paid in full if at all possible,” said Sam Petsonk, a West Virginia attorney who represents the former Blackjewel employees.
The deal calls for Blackjewel to pay $17.3 million to compensate former employees. Blackjewel and Revelation Energy, which were controlled by Jeff Hoops Sr., filed for bankruptcy July 1, 2019.
Hoops and his son, Jeffery A. Hoops II, together would pay $75,000 into the settlement fund, and a company affiliated with Hoops, Lexington Coal, would contribute $50,000.
Blackjewel had 1,100 employees at its Appalachian mines in Eastern Kentucky, Virginia and West Virginia, and about 600 at its surface-mining operations in Wyoming.
The settlement would apply to all those former employees except a few called back to work between July 1 and Nov. 4 last year.
Information on individual payments to the former Blackjewel employees was sealed in the court file, but Petsonk said the deal would provide 44 days’ worth of pay for each former employee.
Attorney fees of one-third would be deducted from that.
The focus of the settlement is a lawsuit under a federal law called the Worker Adjustment and Retraining Notification, or WARN Act. It requires companies above a certain size to give employees 60 days’ notice of an upcoming mass layoff.
The Blackjewel employees received no notice.
Blackjewel said it planned to get a loan as part of the bankruptcy and keep operating, but that loan didn’t come through and it abruptly shut down, leaving hundreds of miners out of work overnight.
The final paycheck it issued to miners bounced, leaving many strapped for money and angry.
Miners blocked a shipment of coal from company mines in Harlan County for nearly two months out of frustration.
The employees ultimately received their final pay, but sued over the lack of layoff notice under the WARN Act.
The deal proposed this week is best for Blackjewel and its former employees because it will avoid a time-consuming, expensive continued legal fight over the notification issue, according to attorneys for the company and miners.
“Given that wage earners typically get railroaded in bankruptcy court, the Blackjewel miners with this proposed settlement and the receipt of their back wages in October have come out substantially better than I predicted when this debacle started,” said Ned Pillersdorf, an attorney in Prestonsburg who also represents the former employees.
The new management at Blackjewel has alleged that Hoops undermined the company before the bankruptcy by paying more than $30 million dollars from Blackjewel and Revelation to Clearwater Investment Holdings, a company that is in his wife’s name.
Hoops and Clearwater contend that the payments to Clearwater were to repay a “revolving line of credit” that Clearwater had provided to Blackjewel.
However, there are no loan agreements to set up such a line of credit, the current management of Blackjewel said.
It was “inequitable and improper” for Hoops to switch money from his coal company to Clearwater, and the transfer hurt Blackjewel’s ability to pay other creditors, the motion argued.
Blackjewel is seeking to recover that money.
If that happens, that could help finance the settlement of the lawsuit over the lack of layoff notice.
This story was originally published September 2, 2020 at 10:16 AM.
