- Case Type:
- Case Status:
- 19-20066 (5th Circuit, Aug 04,2020) Published
- In reconciling provisions of the Coal Act and the Bankruptcy Code, the Fifth Circuit agrees with the Eleventh Circuit that a debtor coal company's payment obligations under the Coal Act may be modified via 11 U.S.C. 1114, provided that the bankruptcy court finds avoiding liability under the Coal Act is not the principal purpose of the underlying transaction.
- Procedural context:
- Direct appeal of Bankruptcy Court judgment rejecting a request for declaratory judgment action filed by the trustees of benefit plans established for retired mine workers.
- Westmoreland Coal Company sought to sell its assets under Section 363. Every bidder conditioned its offer on the termination of successor liability for Westmoreland's obligations under the Coal Industry Retiree Health Benefit Act of 1992 ("Coal Act"), The Coal Act requires many coal producers, including Westmoreland, and any purchaser of substantially all of an included producer's assets, to pay premiums to retirement plans created by Congress to provide benefits for retired miners. Westmoreland proposed modifying its premium obligations under 11 U.S.C. 1114. The retirement plans' Trustees filed an adversary proceeding seeking a declaratory judgment that Westmoreland's obligation to pay premiums under the Coal Act are not "retiree benefits" and thus cannot be modified under Section 1114. Westmoreland moved for a Rule 12(c) judgment on the pleadings. While that motion was pending, the Eleventh Circuit issued an opinion wherein it determined that a different coal company's Coal Act obligations were "retiree benefits" subject to modification under Section 1114. See In re Walter Energy, Inc., 911 F.3d 1121 (11th Cir. 2018). Soon thereafter, the bankruptcy court issued an opinion arriving at the same conclusion, and certified its judgment for a direct appeal to the Fifth Circuit. Per the Fifth Circuit opinion, the decision does not affect the level of benefits mine workers will receive; it simply means that taxpayers, not Westmoreland, will fund more of those benefits.
- Costa, Davis, Smith
3360 in the system
1 Being Processed