Peabody Builds Shell Company (Patriot Coal) To Fail, Then Dump Health, Pensions For 10,000 Retirees

[hatrack]

EDIT

Here’s the story: In the fall of 2007, Peabody Energy Corp. (BTU), the coal-mining giant, spun off all its unionized mines into a new company, Patriot Coal Corp. (PCXCQ) In the process, it got rid of the promises it had made over generations to coal miners and their families.

Or, as Peabody’s chief executive officer put it, “We’re reducing our legacy liabilities roughly $1 billion.” This was such a good idea that another coal giant, Arch Coal Inc. (ACI), unloaded its union mines on Patriot as well, though it cycled them first through yet another front. All totted up, Patriot now had 10,000 retirees and their health-care benefits on its books.

This company was designed to fail. Patriot is almost certainly the only five-year-old company on earth with three times as many retirees as employees, 90 percent of whom never worked for the company. And fail it did, declaring bankruptcy last summer. Now it’s going through Chapter 11 reorganization and hoping to emerge freed of its obligations for the pensions and medical care of those miners.
Disappearing Benefits

In a corporate sleight-of-hand, the promises won with a lifetime of hard work and hard bargaining disappeared first into a holding company. Now, if the bankruptcy judge agrees, they will disappear into thin air.

EDIT

http://www.bloomberg.com/news/2013-03-17/america-s-dirtiest-coal-company.html

[bluedigger]

1. Shit like this makes me want to build a guillotine.

[arcane1]

4. Save a spot for whomever coined the term "legacy liabilities" n/t

[Botany]

2. and yet the coal miners still think that the environmentalists are "the enemy"

From Peabody's home page for investors

"We are focused on targeting operational excellence in safety and productivity, driving out costs and capital at all levels of the organization, maximizing cash flow, and positioning Peabody to benefit from the eventual market recovery. Peabody is committed to pursuing significant shareholder value creation."

http://www.peabodyenergy.com/content/105/Investors

"Paradise"

When I was a child my family would travel
Down to Western Kentucky where my parents were born
There's a backwards old town that's often remembered
So many times that my memories are worn.

And daddy, won't you take me back to Muhlenberg County
Down by the Green River where Paradise lay?
Well, I'm sorry, my son, but you're too late in asking
Mr. Peabody's coal train has hauled it away.

Well, sometimes we'd travel right down the Green River
To the abandoned old prison down by Adrie Hill
Where the air smelled like snakes and we'd shoot with our pistols
But empty pop bottles was all we would kill.

And daddy, won't you take me back to Muhlenberg County
Down by the Green River where Paradise lay?
Well, I'm sorry, my son, but you're too late in asking
Mr. Peabody's coal train has hauled it away.

[Mopar151]

3. Isn't bankruptcy fraud illegal?

The penalty for this should touch every stockholder of Peabody Energy and Arch Coal.

[bluedigger]

5. Only for individuals, apparently.

Nothing is illegal for corporations, just more or less profitable.