The United Mine Workers of America 1974 Pension Plan filed a lawsuit Thursday to force Peabody Energy Corp. and Arch Coal Inc. to negotiate withdrawal liability for the underfunded pension plan before a bankruptcy sale sought by Patriot Coal Corp. is approved.
Patriot is seeking permission to sell some operations to Blackhawk Mining LLC, which would not assume $768 million in pension liabilities to the fund, according to court documents. The asset size was not available at press time.
The lawsuit, filed in U.S. District Court for the District of Columbia, is related to Patriot's May 2 bankruptcy court filing. Patriot Coal, formed in 2007 and 2008 through acquisition of operations from both Peabody and Arch, first filed for bankruptcy protection in 2013. That filing allowed the company to reduce some benefit obligations but it kept its pension liabilities after the union sued.
On July 16, Patriot filed a motion in bankruptcy court to terminate its collective bargaining agreement with the union, which has filed a legal challenge.
In the Thursday filing by the UMWA, which seeks declaratory judgment against Peabody and Arch, trustees for the pension fund said the two companies are liable for statutory withdrawal liability under the Employee Retirement Income Security Act once the bankruptcy case concludes, and that ERISA obligates them to arbitrate.
“Peabody and Arch contributed to the 1974 Pension Plan for decades, but in recent years engaged in various corporate transactions in an attempt to shed all of the liability,” the lawsuit said.
In a statement, Peabody said that it is not signatory to a labor agreement requiring pension contributions and that it “has no liability” to the pension plan. “Patriot Coal was designed to succeed as an independent company and to indefinitely continue its participation in the multiemployer plan – which was well funded at the time.”
Arch Coal spokeswoman Logan Bonacorsi said in an e-mail that Arch sold its union and non-union subsidiaries 10 years ago to ArcLight Capital Partners, “a well-capitalized, Boston-based financial firm specializing in energy investments.” ArcLight Capital sold those assets to Patriot Coal two and a half years later. “Arch had no involvement whatsoever in the transaction between ArcLight Capital and Patriot Coal,” she said.