Bankruptcy Court Approves $43 Million Coal Cleanup Deal
On Tuesday, September 5, 2017, a bankruptcy court in Missouri approved a $43 million settlement between the reorganized Peabody Energy Corp., which is a coal producer, and the federal government. The settlement related to CERCLA liability incurred by one of Peabody’s affiliate companies, Gold Fields Mining LLC. Peabody acquired responsibility for Gold Fields’ pollution liability when it gained control of the company in the 1990s.
The federal government had filed proofs of claim in Peabody’s Chapter 11 bankruptcy proceeding on behalf of seven Native American tribes and five Midwestern states. The agreement to settle the proofs of claim was incorporated into Peabody’s plan of reorganization, which was confirmed earlier this year. Under the final agreement, Peabody will pay $20 million, its insurers will pay $12 million, and the federal government will retain a tax payment setoff of $11.2 million. A further $2 million will be placed in a liquidating trust and used exclusively for maintenance and response operations at a former mining site in Kansas.
Peabody is one of several energy companies that have filed bankruptcy proceedings in recent years due to reduced demand for coal and resulting declines in energy prices. Peabody has since received hedge-fund backing that allowed it to emerge from Chapter 11 bankruptcy with the erasure of $5 billion in debt and a new capital stock structure.
The case is In re: Peabody Energy Corp. et al., case number 4:16-bk-42529, in the U.S. Bankruptcy Court for the Eastern District of Missouri.