According to a Reuters report, the company is proposing the establishment of a trust to be known as a voluntary employees’ beneficiary association which will provide no more than $US40 million annually up to a limit of $200 million.

The total will not meet the needs of impacted workers, as the documents reflect retiree benefits in 2012 totaled $71 million – an annual total which is projected to rise to about $73.8 million.

The trust development was outlined in a newly amended lawsuit filed against Peabody Energy – which spun off Patriot in 2007 – and Arch Coal – which spun off Magnum Coal shortly after – by eight miners and the United Mine Workers of America.

The UMWA has taken the two producers to task, claiming the spin-off companies were created in part to shun their responsibilities to former workers.

Reuters said the group was seeking a class-action status for its suit to help more than 10,000 workers impacted by the Peabody and Arch spin-offs.

The UMWA wants the two producers, as opposed to Patriot, to be liable for retiree health benefits, including those who retired before the 2007 transactions and never worked for Patriot.

None of the operators have released public statements on the amended filing.

However, in an interview late last year Peabody spokeswoman Meg Gallagher told ILN that, contrary to UMWA claims, one of its subsidiaries has assumed obligation to pay more than $600 million in healthcare liabilities under the spin-off.

“While these are administered by Patriot, Peabody has paid for these healthcare benefits since the spin-off and continues to do so today,” she said.

“The UMWA was fully aware of the plan regarding retiree healthcare benefits at the time of the spin-off and assented to the payment arrangement.

“And, contrary to union claims, Patriot was a viable company when it was spun-off in 2007 and substantial events inside and outside Patriot’s control significantly altered its future.”

Gallagher went on to say that the company and the world had both significantly changed since October 2007 when the Patriot spin-off came into existence.

“These changes include Patriot’s transformational acquisition of Magnum Coal Company, significant changes in Patriot’s capital structure, decreased demand for US coal due to sharp declines in natural gas prices, the softening of global steel markets and more burdensome regulations,” she said.

“Patriot notes many of these same factors in its filings with the bankruptcy court.”

On July 9, 2012, Patriot announced that the miner and its wholly owned subsidiaries had filed for Chapter 11 bankruptcy, citing market conditions.

The UMWA lawsuit pending in federal court in West Virginia is formally known as Lowe et al v. Peabody Holding Co LLC et al, US District Court, Southern District of West Virginia, No. 12-06925.

The bankruptcy case is In Re Patriot Coal Corp et al, U.S. Bankruptcy Court, Eastern District of Missouri, No. 12-51502.

It was recently transferred from New York, where it was initially filed.