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Judge Denies Former CEO's Move to Liquidate Blackjewel Coal

Protesting miners blocked the tracks in the morning fog.
Sydney Boles
Protesting miners blocked the tracks in the morning fog.

A federal bankruptcy judge has denied a petition from former Blackjewel coal executive Jeff Hoops to liquidate the company. The decision means the reorganization of the company will continue under Chapter 11 bankruptcy as former employees, creditors and state agencies seek to recover millions owed by the company.

Hoops cited “permanent negative cash flow” at his former company, which has accrued at least $80 million in administrative and other expenses since its bankruptcy filing on July 1 last year. 

The nearly 3,000-filing-long Blackjewel bankruptcy docket demonstrates an 18-month scramble by the company’s creditors to recuperate as much money as possible from a too-small pot. According to court filings, Blackjewel also has multiple outstanding permit violations, an unknown amount of outstanding environmental reclamation liabilities, unpaid taxes totaling $2 million, tax liabilities of untold amounts, and millions in unpaid employee healthcare claims. 

The request to liquidate, according to coal bankruptcy expert Josh Macey, was yet more proof that Blackjewel’s future was grim. “Given how long this bankruptcy has dragged on, how poor conditions for coal are right now, how speculative and unprofitable Blackjewel’s assets have been, it isn’t surprising that it’s moving to a liquidation,” Macey said. 

Federal Judge Benjamin A. Kahn did not explain in his order why he was denying Hoops’ petition to liquidate. But environmental advocates had previously objected to the request, arguing that a liquidation would make it less likely that certain of Blackjewel’s mining permits would be reclaimed. 

Federal agencies, including the Internal Revenue Service and the Department of the Interior, also objected to the petition to liquidate.  “The United States believes that the best course of action is to allow the Debtors [Blackjewel] additional time to develop a plan that would meet the requirements of Chapter 11 of the federal bankruptcy laws and not require the Debtors to convert to a Chapter 7 liquidation,” attorneys for the agencies wrote. 

Blackjewel made headlines last year after its abrupt collapse left hundreds of Kentucky and Virginia coal miners out of work and without pay. Environmental advocates remain concerned that some coal mines will put strain on state mine land reclamation funds or go unreclaimed altogether. 

Hoops has been sued in the same bankruptcy court over alleged financial mismanagement of Blackjewel and associated companies. 

Jeff Young is managing editor of the Ohio Valley ReSource, a journalism collaboration led by Louisville Public Media.

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