Patriot Coal Corp., a large U.S. coal producer, announced it and substantially all of its wholly-owned subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the Southern District of New York. Chapter 11 gives companies a chance to restructure rather than close.
“The coal industry is undergoing a major transformation and Patriot’s existing capital structure prevents it from making the necessary adjustments to achieve long-term success,” said Patriot Chairman and CEO Irl F. Engelhardt. “Our objective is to use the reorganization process to address important issues in an orderly way and make the company stronger and more competitive.”
The court granted Patriot interim approval of its $802 million Debtor-in-Possession (DIP) financing. The DIP financing and cash from the company’s ongoing operations will provide Patriot with financial flexibility to operate its business in the ordinary course, including funding post-petition payments to suppliers and meeting other customary business obligations, during the reorganization process.