Murray Energy Chapter 11 case conversion hearing continued to June 15

By Caroline Salls

Pittsburgh, May 18 – A hearing on conversion of Murray Energy Holdings Co.’s Chapter 11 case to Chapter 7 or appointing an examiner or Chapter 11 trustee for the case has been continued to June 15 from May 22, according to an order filed Monday with the U.S. Bankruptcy Court for the Southern District of Ohio.

The agreed order does not give a reason for the continuance.

As previously reported, Consol Energy Inc. asked the court to convert the case in a motion filed in April.

Consol said Murray filed a motion on March 30 to suspend the Murray debtors’ obligations to pay for retiree health care under the Murray Energy Corp. Individual Employer Plan. In that motion, Consol said Murray disclosed some of the measures it had taken to preserve cash, including abandoning incentive and retention bonus plans for employees, limiting the amount paid to critical vendors, idling mines and requiring the chief executive officer’s approval of expenditures greater than $25,000.

However, the conversion motion said only recently has Murray indicated that the executive management team will receive a reduction of their salaries, and the Murray debtors continue to make interest payment to undersecured lenders.

At an April 14 hearing, Consol said Murray acknowledged that its negative financial performance created an alleged event of default on its $350 million debtor-in-possession term loan, resulting in the DIP lender’s refusal to allow the Murray debtors to draw on the remaining portion of the term loan and heightening the severity of the debtors’ ongoing liquidity concerns.

“Even though the debtors’ liquidity and overall financial outlook has been declining since the commencement of this case, the debtors argued in February that it was in their best interests to provide $10.7 million in capital to an affiliate and non-debtor in this case, Murray [Metallurgical],” the conversion motion said.

In addition, Consol said numerous creditors have come forward regarding the Murray debtors’ failure to make post-bankruptcy payments, and the company’s unpaid expenses will only continue to mount as a result of the its liquidity issues.

Consol said Murray also continues to incur substantial professional fees in attempting to maintain the Chapter 11 case, requiring the creditors to question whether the case is administratively insolvent in the wake of the deteriorating liquidity as administrative expenses require payment in full on the effective date of Murray’s Chapter 11 plan.

Based on the ongoing and worsening liquidity concerns, Consol said it is apparent that without a substantial infusion of liquidity from the DIP loan or otherwise, the Murray debtors have no reasonable likelihood of a rehabilitation.

Murray Energy is a Saint Clairsville, Ohio, coal company. The company filed bankruptcy on Oct. 29, 2019 under Chapter 11 case number 19-56885.

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