MORGANTOWN — Consol Energy wants competitor and debtor company Murray Energy to convert its Chapter 11 bankruptcy to Chapter 7. The United Mine Workers of America said Wednesday this is an effort by Consol to destroy a rival and put thousands of miners out of work in the process.
“Consol Energy’s filing asking the Bankruptcy Court to convert Murray Energy’s bankruptcy from a Chapter 11 reorganization to a Chapter 7 liquidation could, if granted, potentially throw nearly 2,000 miners out of work,” UMWA International President Cecil E. Roberts said in a release. “We have very strong opinions about this sort of tactic which would put our members and their families at grave risk, cutting off their health care and forcing them to look for other work at the time of a global pandemic.
“This is one of the most outrageous things I have ever seen a coal company do,” Roberts said. “And that is saying a lot.”
Murray – which operates underground mines in Monongalia, Marion, Harrison, Marshall and Ohio counties – filed for Chapter 11 in southern Ohio U.S. Bankruptcy Court in October. It purchased its local operations from Consol and is still owes Consol money, according to court filings.
Citing Murray’s declining financial state and failure to pay creditors, Consol on April 22 moved for the court to either appoint an examiner to determine how much money is needed for Murray to pay its expenses, or a Chapter 11 trustee to manage the company or covert the bankruptcy to Chapter 7.
Chapter 11 bankruptcy reorganizes a company and allows it to continue operation under new owners. Chapter 7 liquidates assets to pay off the debts and closes the company, according to business resources.
Consol’s filing says that Murray;s negative financial performance put it into alleged default on its $350 million debtor in possession loan (which allows it to retain control of its assets during the bankruptcy). Numerous debtors have reported Murray’s failure to make payments and Murray foresees a continued decline.
Without a substantial infusion of money, Consol said, Murray has no reasonable likelihood of a rehabilitation.
In light of this filing, Roberts said Wednesday, “In my mind there is no other conclusion but that Consol is using the coronavirus pandemic and the corresponding depression in the coal markets – which has caused liquidity problems for Murray as it works its way through the Chapter 11 process – to kill off the company. And in so doing, Consol will callously destroy jobs, families and the communities that depend on them, just so it can take Murray’s customers.
“We cannot do what we would normally do, which is to get several thousand people out in front of Consol’s shiny headquarters and say a few things in protest,” Roberts said. “But that does not mean we will be silent about this. It seems clear that Consol’s plan puts people’s lives and livelihoods at risk. We will not stand idly by while it threatens our members, their families and their communities.”
Background
The relationship of Consol and Murray has been contentious during this case.
On March 30, Murray moved the court to allow it on an interim basis to suspend its obligations to pay for certain retiree healthcare under the Murray Energy Corporation Individual Employer Plan, “because of the unprecedented market downturn, which has necessitated an urgent need for cost savings, and the recent legislation that protects the retirees.” Murray contended that the suspension will not impact any retiree because it obligations are backstopped by the U.S. Treasury.
Consol objected to the motion on April 7, saying Murray $30 million in February alone, and $893 million since October 2019 because of ongoing poor decisions. It could have reduced or suspended founder Robert Murray’s $12,000,000 annual salary; decided if it was worthwhile to continue paying the salaries of Murray’s children; closed all of Murray’s unprofitable companies; and not poured $20 million into Murray’s bankrupt metallurgical coal subsidiary Murray Met, among other measures.
Murray’s management, Consol said, has displayed “a stunning inability to control costs, manage the market and be good stewards of the estates’ businesses and assets.”
On the same day, Murray alleged in its own filing, “Because of the unprecedented market downturn, and now the deteriorating global economic crisis, Consol … is severely financially distressed, facing the very real risk of its own bankruptcy.”
Consol replied to that allegation, “That statement – made without any basis and for no legitimate purpose – should put to rest any notion that the debtors are acting in good faith with respect to Consol or, for that matter, any other creditors.”
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