Hartshorne Holdings files Chapter 11 bankruptcy, plans to sell assets

By Caroline Salls

Pittsburgh, Feb. 21 – Hartshorne Holdings, LLC filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the Western District of Kentucky.

“While the debtors continue to believe in the Western Kentucky region and the high quality coal produced from the Poplar Grove Mine, they have not been able to produce coal in the volumes necessary to generate a positive cash flow and stave off a liquidity crisis that ultimately necessitated the filing of these Chapter 11 cases,” Hartshorne president and manager David Gay said in a statement filed with the court.

Gay said the company’s inability to meet production targets stems from ongoing operational and technical issues and the regulatory and cost pressures that have led to an industry-wide downturn among coal companies.

Hartshorne began discussions with senior secured lender agent Tribeca Global Resources Credit Pty Ltd. regarding a consensual path forward, Gay said, and Tribeca indicated that it was unwilling to continue funding the debtors’ regular operations outside of a Chapter 11 case and the launch of a sale process.

As a result, Gay said the company filed the bankruptcy cases and will look to sell substantially all of its assets through a court-supervised sale process.

In connection with an agreement with Tribeca and some funds it manages regarding debtor-in-possession financing and discussions related to the Chapter 11 process in general, Gay said Hartshorne will continue to operate the Poplar Grove mine, provided that Tribeca has the right after the first two weeks in Chapter 11 to require those operations to shift to care and maintenance.

Tribeca will serve as the agent for a $7.5 million DIP loan.

The facility will mature 120 days after closing, subject to a 30-day extension if the company has received one or more qualified bids for its assets.

Interest will accrue at a rate of 10%.

In addition, Hartshorne will be required to a pay a 2.5% draw-down fee, a $50,000 DIP agent fee and a $17,500 DIP security trustee fee.

The company is seeking interim access to $1.25 million of the DIP financing.

According to court documents, Hartshorne has $50 million to $100 million in both assets and debt.

The company did not list any unsecured creditors with claims of $1 million or more.

Frost Brown Todd LLC is representing Hartshorne in its Chapter 11 proceedings.

Rumsey, Ky.-based Hartshorne develops and operates coal mining projects in the United States. The Chapter 11 case number is 20-40133.

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