February 26, 2013
Diane Cohen, LaborPress DC Bureau
UMWA retirees are fighting to save the benefits earned in a lifetime of work, while big coal companies try to use bankruptcy as a free pass out of their obligations. Using bankruptcy this way is not a new story in corporate America, but Big Coal has introduced a new twist: a company designed from the outset to go bankrupt.
In the course of decades, the profits reaped from deep-shaft union mining in West Virginia and Kentucky were the foundation for making Peabody and Arch two of the world’s biggest coal operators, with gigantic western and international operations. Half a decade ago, the two companies bundled their remaining deep-shaft operations, their retiree obligations and a nice chunk of debt into a spin-off named Patriot. Patriot is now in bankruptcy and insisting that obligations to retirees are “unsustainable.”
Patriot Coal was created by Peabody Energy in 2007 with the specific purpose of allowing Peabody Energy and Arch Coal to shed its long-term health care obligations to its retirees and their families. The real culprits in this scheme, Peabody Energy and Arch Coal, have made hundreds of millions the last few years while Patriot has lost millions.
Saddled with too much debt and too little production to keep pace with its debt load, Patriot is seeking to reorganize under Chapter 11 bankruptcy.
Twice in the past month UMWA retirees have demonstrated in St Louis to insist that Patriot, Peabody and Arch live up to their obligations. More protests are planned.