NEW YORK Two bondholders
of bankrupt Patriot Coal Corp. are calling for an independent
trustee to oversee the companys asset disposal, arguing
that most of the companys 99 units in bankruptcy have no
obligation to unions or retirees.
New York-based Aurelius Capital
Management LP and Knighthead Capital Management LLC claim that
the bankruptcy has been mismanaged because it assumes that all
the companys units have obligations to current and
retired members of the United Mine Workers of America (UMWA)
union. The companies say that only 13 units have such
obligations, according to court documents.
"The motion filed by the two
investment firms is a misguided, costly and a disruptive
distraction at a time when the company is focused on achieving
the cost savings it needs to reorganize successfully and
protect the interests of all stakeholders," Patriot Coal vice
president of investor relations Janine Orf said, adding that
the motion includes allegations "that are simply not true" and
Patriot "will vigorously oppose this motion."
The St. Louis-based company
filed for Chapter 11 bankruptcy protection in July 2012. It is
seeking relief from paying an estimated $1.6 billion in retiree
health-care benefits to avoid "severe business disruption."
The company has proposed the
establishment of a Voluntary Employee Beneficiary Association
trust to provide health-care services to retired UMWA members,
as well as changes to wages, benefits and work rules for
employees who are members.
Aurelius and Knighthead own
3.25-percent notes due in 2013 and a majority of Patriots
8.25-percent notes due in 2018, the funds said.
A version of this article was
first published by AMM sister publication Steel First.