Update: Coal CEO to resign as part of bankruptcy deal after workers' cashed checks vanish
A federal judge approved a $5 million lifeline to help one of the country's largest coal producers navigate bankruptcy on the condition that its CEO step down.
Court documents filed Wednesday said the financing from Riverstone Credit Partners will go toward providing security and personnel to extinguish fires at Blackjewel LLC's mines as it determines its next steps.
The agreement requires CEO Jeff Hoops to resign.
The company filed for Chapter 11 bankruptcy protection Monday, with Hoops saying there wasn't enough money to operate or pay employees' salaries.
On Wednesday, employees who cashed their checks last week found out that their money was nowhere to be found. Workers in the Harlan County mines owned by Blackjewel messaged WYMT after money vanished from their accounts.
Maegan Thacker, a mother of three kids, said her husband works as a second-shift electrician at the Darby Fork mine. After hearing what happened to other miners, she kept a close eye on her account.
"So about one o'clock my husband checked our bank account and it had happened. Three thousand in the hole. I mean, to be three thousand in the hole? I mean what are we supposed to do? How are we supposed to pay our mortgage? How are we supposed to put food on the table? I mean, we don't know what we're gonna do," said Thacker.
WYMT investigated to see how this is possible, let alone legal. Since the company did file for bankruptcy, the checks cannot be cashed. This is why the funds were withdrawn from people's accounts. But bankers we talked to said to call them and they will administer the checks once the court allows them to.
Blackjewel has mines in Wyoming, Kentucky, Virginia and West Virginia. The most recent federal statistics say it is the sixth-largest coal producer.
Harlan County Judge-Executive Dan Mosley posted on Facebook about the check issues.
"This is reprehensible. It makes me sick for these folks," he wrote. "The company did not provide and still has not provided any written notice to local government that anyone would be heading to the unemployment line. I am told that the state was not notified of this action as well."
The rest of his statement is in the Facebook post below.
Other major U.S. coal producers also have filed for bankruptcy protection in recent years.
A federal judge has rejected a proposed new financing agreement for a West Virginia coal operator that filed for bankruptcy protection earlier this week.
News outlets report a bankruptcy judge in Charleston said in a ruling released Wednesday that Blackjewel LLC must explore more alternatives in its Chapter 11 bankruptcy filing.
Milton-based Blackjewel said in a filing Tuesday that without the agreement, it would shift to Chapter 7, which would seek asset liquidation.
The nation's sixth largest coal producer had been granted the emergency hearing on its plan to continue with new lenders after being denied a $20 million line of credit to keep its coal operations running.
The company's two Wyoming mines abruptly closed after Monday's bankruptcy filing.
Blackjewel also has mines in Kentucky, Virginia and West Virginia.