Mission Coal creditors committee objects to sale procedures, lead bid

By Caroline Salls

Pittsburgh, Dec. 17 – Mission Coal Co.’s official committee of unsecured creditors objected to the company’s motion for approval of the bid procedures for the sale of the company’s assets, according to a Friday filing with the U.S. Bankruptcy Court for the Northern District of Alabama.

“While the committee supports a fair and competitive auction process intended to encourage all prospective bidders to put their best bid forward, protect jobs and promised employee and retiree benefits and maximize value for all constituents – simply put, this is not that process,” the objection said.

The committee said the stalking horse bid submitted by Mission Coal’s official committee of unsecured creditors contains “significant uncertainties” that discourage competitive bidding, hinder the ability to maximize value to the estates for the benefit of creditors and is likely to create a sale process primarily for the benefit Mission Coal’s secured lenders without any guarantee of administrative solvency.

In addition, the committee said unspecified consideration set by the stalking horse bid, combined with the lenders’ ability to credit bid up to an additional $60 million, makes it “nearly impossible for potential bidders to calculate an acceptable minimum overbid.”

The creditor group also challenged the stalking horse purchase agreement’s exclusion of employee obligations.

“There has been significant interest in the assets that has resulted in a high volume of alternate indications of interest,” the objection said. “Given this high level of interest, coupled with the illusory nature of the stalking horse bid itself, it is unclear whether the stalking horse purchase agreement provides a sufficient floor to encourage a competitive auction process.”

Mission is a Kingsport, Tenn.-based coal company. The company filed bankruptcy on Oct. 14 under Chapter 11 case number 18-04177.

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