The hearing begins

PATRIOT Coal’s long-awaited bankruptcy hearing got underway on Monday and could result in a decision on the St-Louis based company’s unionized healthcare and benefit payments by the end of the week.
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Crosses planted at an April 16 Patriot protest

Staff Reporter

Its proposed benefits scheme has been the most controversial part of Patriot’s bankruptcy case since it was filed in July last year.

Patriot lawyers told Judge Kathy Surratt-States that the company was in a “dire financial condition” and must receive concessions from the union to avoid liquidation.

The company proposed to the union last month that it would create a trust with a maximum of $300 million from future profit-sharing to fund some level of health benefits.

Seeking to modify its collective bargaining agreements, Patriot would also give the union a 35% equity stake in the company once it emerged from bankruptcy.

Patriot chief executive officer Bennett Hatfield said the move was necessary to save more than 4000 jobs but the United Mine Workers of America disagreed, claiming the company and Peabody Energy, which spun off Patriot in 2007, were attempting to escape their liabilities.

UMWA labelled the cuts immoral, drastic and "nowhere near" fair.

The union reported that more than 6000 people protested outside the hearing but according to Reuters the police put the number closer to 2000 and confirmed that sixteen arrests were made.

The courtroom was also at capacity, with more than half of the sixty seats filled by miners and their families.

The union has been protesting consistently for a number of months in states where both Peabody and Patriot have operations.

The first issue on Monday’s agenda was the 2007 Patriot spin-off, with the company arguing that Peabody loaded it up with liabilities, giving it little chance for success.

The spin-off rid Peabody of “approximately $600 million of retiree healthcare liabilities, along with hundreds of millions of dollars of other liabilities, including environmental reclamation obligations and black lung benefits”, Patriot said in earlier court papers.

However, in a statement on Monday, Peabody said Patriot was "highly successful" following the spin-off and had "significant assets" that helped its market value "quadruple in less than a year".

Surratt-States is yet to rule on the matter.

The heated hearing will continue on Tuesday and could last until the end of the week.

Patriot reached new labor terms with its non-union employees last week.

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