Bankrupt Patriot Coal can reject collective bargaining - court rules
Source: Reuters
May 29 (Reuters) - Bankrupt Patriot Coal Corp. can reject collective bargaining agreements, cease pension contributions and convert retiree healthcare to an outside fund as part of its plan to save $150 million a year in labor costs, a court ruled on Wednesday.
Judge Kathy Surratt-States of the U.S. Bankruptcy Court in St. Louis said Patriot Coal, which filed for bankruptcy last year, might have been a victim of unwarranted optimism about future prospects but that unions shared some blame.
"Unions generally try to bargain for the best deal for their members, however, there is likely some responsibility to be absorbed for demanding benefits that the employer cannot realistically fund in perpetuity, particularly given the availability of sophisticated actuarial analysts and cost trend experts," she wrote in a 102-page opinion.
Read more: http://mobile.reuters.com/article/idUSL2N0EA1US20130529?irpc=932
KamaAina
(78,249 posts)Even cities like Stockton and San Bernardino, Cal. are using bankruptcy as a "Get Out Of Union Contracts Free" card.
The big fish: the U.S. Postal Service. That's the one the Kochs really want to take down.
And of course, you'll never see a sentence reading "Bankrupt John Q. Public can reject credit card agreements, cease paying taxes ,..."
hobbit709
(41,694 posts)Meanwhile the top people are still getting their pay and benefits.
mountain grammy
(26,658 posts)denverbill
(11,489 posts)No doubt run by the right-wing asshole.
sulphurdunn
(6,891 posts)people you'll ever meet who wouldn't piss on you if you were on fire with two broken legs in a ditch on the side of the road.
denverbill
(11,489 posts)Teamster Jeff
(1,598 posts)Patriot Coal. Then Peabody dumped all of their pension obligations on to Patriots books knowing this day would come.
erpowers
(9,350 posts)There should be a bankruptcy law that states, when a company declares bankruptcy and asks to dissolve its union and healthcare obligations they can do so, but only if whatever severance package the CEO agreed to must become null and void. That CEO and all other CEOs that follow, until the company exits bankruptcy, must accept a 90+% pay cut that assures they will make less than $1 million. Until the company exits bankruptcy the current CEO must sell all stock options and give the proceeds to the company. Any new CEO cannot be offered stock options until the company exits bankruptcy.
The board members must either immediately resign while, like the CEO, forfeiting their entire severance package, or take a 90+% pay cut until the company exits bankruptcy. They must also give up all benefits that come from being a board member that are paid for by the company.
I say this because if regular workers have to give up pension, healthcare, and benefits then the people leading the company should have to give up some benefits. There have been a number a occasions in which regular workers were asked/pushed to take pay, pension, and/or healthcare cuts only to see the CEO of the company get a raise. Maybe the union asked for too much, but the company leaders were running the company, as a result, they should lose something if regular workers have to lose things.
cstanleytech
(26,334 posts)"Patriot's current proposal would cease pension contributions and convert healthcare to a voluntary employees' beneficiary association, or VEBA, funded by $15 million in up-front cash and $300 million in profit-sharing contributions. The union would receive a 35 percent equity stake in post-bankruptcy Patriot, which it could sell to help fund the VEBA. The company's proposal would also reduce wages and decrease paid time-off."
Teamster Jeff
(1,598 posts)Manchin Responds To Patriot Coal Ruling: This Ruling Is A Travesty
Washington, D.C. U.S. Senator Joe Manchin (D-W.Va.) issued the following statement in response to a St. Louis-based federal bankruptcy judges ruling that allows Patriot Coal to ignore its collective bargaining agreement with the United Mine Workers of America and change retiree health care benefits.
This ruling is a travesty. It is wrong that Peabody can set up a company such as Patriot, fill that company with its liabilities and then spin that company off for the sole purpose of avoiding its contractual and moral obligations to its workers. I dont think bankruptcy laws were ever designed to shield corporations from their promises and responsibilities. I will continue to fight for fairness in the bankruptcy system.
http://www.manchin.senate.gov/public/index.cfm/press-releases?ID=c544304c-6dbe-44e0-aece-ebdafe296d89
cstanleytech
(26,334 posts)setting this up then?
mtasselin
(666 posts)Senator Manchin said this ruling was travesty until they give him some reelection money and that will make it all better for him. I would like to know the people of this country are going to wake up and go on a nation wide strike, shut this fuckin country down.
Kolesar
(31,182 posts)In a new 30-second TV ad running statewide Monday, the Democratic nominee to replace the late Sen. Robert Byrd (D-W.Va.) actually fires a bullet through a piece of paper meant to symbolize last years House-passed cap-and-trade bill.
...
Manchin announced last Wednesday that the state is suing the Environmental Protection Agency over its crackdown on mountaintop-removal practices by the coal-mining industry.
OldRedneck
(1,397 posts)Count on it.
Omaha Steve
(99,780 posts)FOR IFFOR IMMEDIATE RELEASE
MAY 29, 2013
CONTACT: Phil Smith, 703-291-2430
Patriot Coal Bankruptcy Ruling Wrong, Unfair, UMWA Says
[TRIANGLE, VA] The ruling announced today by Judge Kathy Surratt-States of the U.S. Bankruptcy Court of the Eastern District of Missouri in favor of proposals by Patriot Coal to eliminate its collective bargaining agreements and cut off retiree health care is wrong, unfair and fails to fully recognize the coming wave of human suffering that will be experienced by thousands of people throughout the coalfields, United Mine Workers of America (UMWA) International President Cecil E. Roberts said today.
As often happens under American bankruptcy law, the short-term interests of the company are valued more than the dedication and sacrifice of the workers, who actually produce the profits that make a company successful, Roberts said.
The UMWA presented a very clear picture in court of what Patriot actually needed to come out of bankruptcy, Roberts said. Patriot can survive as a viable and profitable company well into the future without inflicting the level of pain on active and retired miners and their families it seeks. Patriot is using a temporary liquidity problem to achieve permanent changes that will significantly reduce the living standards of thousands of active and retired miners and their families.
We are disappointed that the Bankruptcy Court failed to see that, and we intend to appeal the ruling to the Federal District Court, Roberts said.
But I want to make it emphatically clear that despite this ruling, the UMWAs effort to win fairness for these active and retired workers is by no means over, Roberts said. Indeed, this ruling makes it more important than ever for the architects of this travesty, Peabody Energy and Arch Coal, to take responsibility for the obligations they made to thousands of retirees who are now at imminent risk.
Patriot was created by Peabody Energy in 2007 with 43 percent of Peabodys liabilities but just 11 percent of its assets. Because Patriot was created with insufficient assets to meet its liabilities to retired miners, analysts such as Bruce Rader, Professor of Finance at Temple University, have described the company as designed to fail. Even Patriot CEO Ben Hatfield said that something doesnt smell right about the manner in which his company was founded.
In 2008, Patriot acquired Magnum Coal, a company created by Arch Coal and other investors, into which Arch had shifted all its long-term liabilities to retirees, spouses and widows.
Under the Bankruptcy Courts ruling, Patriot will be allowed to cease paying for retiree health care benefits as early as July 1. Responsibility for paying benefits would be handed over to a Voluntary Employee Beneficial Association (VEBA), which will only have guaranteed funding of $15 million plus a royalty payment of $0.20 per ton of coal the company produces, which may add approximately $5 million to the VEBA per year. Current health care costs for these retirees average nearly $7 million per month.
The company has offered the UMWA a 35 percent stake in the company, which could be sold to help fund the VEBA, in the event there is a willing buyer. Since the current and future value of the company is unknown, there is no way of knowing how much money this could provide for health care benefits or when such funding would be available. The company has also proposed a profit-sharing mechanism that would not provide any additional assistance to the VEBA until 2016 and even then would not provide more than about $2 million per year, at best.
We are going to continue to make every effort to secure adequate funding to meet the long-term health care needs of these retirees, Roberts said. Peabody and Arch can decide to live up to their obligations and end this problem tomorrow. But if they dont, we will continue our litigation against them and are optimistic about our chances.
The UMWA has filed suit in Charleston, W. Va., alleging that Peabody and Arch violated the Employee Retirement Income Security Act (ERISA) by illegally dumping contractual obligations when they created Patriot and Magnum.
The Bankruptcy Judges ruling creates a path for Patriot to throw out its current collective bargaining agreements with the UMWA and implement substandard conditions of employment at its operations where the UMWA represents the workers. This includes cutting wages by several dollars per hour, taking thousands of dollars out of family incomes; eliminating paid time off by about one-third, with higher cuts for more senior employees; and drastically increasing out-of-pocket health care costs.
The ruling also allows Patriot to eliminate retiree health care for currently active employees, more than half of whom have worked long enough to be eligible for health care under the cancelled UMWA contract. Several hundred more are within 3 years of eligibility.
Patriot says that for it to survive, the union-represented workforce needs to be on the same scale as its non-union workers, Roberts said. No, it does not need that and it never did.
The UMWA made specific proposals to the company that demonstrateusing the companys own numbers and future projectionshow the company could get through the next couple of lean years and then make millions, without punishing its workers in this way, Roberts said. The company rejected every one of those proposals and continues to insist upon changing long-standing contractual language that will not improve their bottom line one penny.
We will continue to meet with the company this week to see if there is a way forward, Roberts said. We have long acknowledged that Patriot is in trouble, because it can no longer pay Peabody and Archs bills. We remain willing to take painful steps to help Patriot get through the rough period it faces over the next couple of years.
But if were going to share in that pain, then we have every right to share in the companys gain when it becomes profitable again, Roberts said. That only makes sense, and we will continue to try to get this management team to understand that.
The UMWAs public protests against Peabody and Arch will continue with a June 4 rally in Henderson, KY, at 10:00 a.m. at the Henderson County courthouse. More than 4,000 people are expected at that event.
DemoTex
(25,405 posts)My pension (US Airways Pilots' Pension Fund) was terminated by a federal bankruptcy judge on March 31, 2003. A few months later the then-CEO of US Airways walked with over $10-million in his pockets.
Wolf Frankula
(3,602 posts)That when an executive screws up and wrecks his company, he walks away with his bonus because it's in his contract and 'a contract is a contract.'
But Union workers can have their contracts torn up, because apparently, if you're not a Hedge Fund Pirate, a Bean Counting Accountant, a Pettifogging Lawyer, or a Master of Bullshit Administration, a contract is not a contract.
Wolf