Updated: Westmoreland Coal files for Chapter 11 bankruptcy

Judge approves motions to keep company operating


Editor's note: This story was first published on Oct. 9. It was last updated at 09:31:36 on Oct. 11. 

Westmoreland Coal Company announced on Tuesday, Oct. 9, that it has filed for Chapter 11 bankruptcy protections. Westmoreland has entered into a restructuring support agreement (RSA) with members of an ad hoc group of lenders.

In addition, Westmoreland affiliate Westmoreland Resource Partners, LP (WMLP) simultaneously filed for relief under chapter 11 of the Bankruptcy Code.

The WMLP states that their restructuring will be “in connection with a value-maximizing sale and marketing process that began prior to the commencement of WMLP’s chapter 11 case.”

Westmoreland Resource Partners owns the Kemmerer Mine.

In a statement from Westmoreland, Interim Chief Executive Officer Michael Hutchinson said the company’s goal is to “emerge as a stronger Westmoreland.”

“After months of thoughtful and productive conversations with our creditors, we have developed a plan that allows Westmoreland to operate as usual while positioning Westmoreland for long-term success,” Hutchinson said.

Westmoreland is emphasizing that it is business as usual for the company’s mining operations. The company is also emphasizing that the financial restructuring strategies do not include a reduction in employees at any Westmoreland-operated mine.

A hearing on first day motions for Westmoreland’s Chapter 11 bankruptcy filings was held on Oct. 10 in the United States Bankruptcy Court for the Southern District of Texas in Houston, Texas.

In bankruptcy court, first day motions are what the debtor presents to a judge that states how they will continue to operate financially after filing for Chapter 11 bankrupcty protections. Westmoreland’s first day motions outlined a plan to continue operating the company by working with a group of lenders. 

On Tuesday, Judge Marvin Isgur approved Westmoreland’s filings so they could continue to operate during the proceedings.   

These first-day motions enable Westmoreland to continue day-to-day operations  — such as regular payment of employee wages and benefits — during the bankruptcy and financial restructuring process.

For more information on the court filings and claims process, visit donlinrecano.com/westmoreland.

Read the complete press release from Westmoreland here.

Westmoreland Coal Company — based out of Englewood, Colo. — owns mines in Montana, Wyoming, North Dakota, Ohio,  Texas, New Mexico, and seven mines in Canada.

According to the company’s website, Westmoreland’s Canadian subsidiaries and Westmoreland’s captive insurance company, Westmoreland Risk Management, Inc., are excluded from the filings.

This announcement of Chapter 11 bankruptcy filings comes after months of Westmoreland working to restructure debt.

In April, the company’s quarterly report stated that Westmoreland was working on a financial restructuring process. That statment, combined with Westmoreland Coal Company’s delisting from the NASDAQ on April 25, also provided hints that the company was teetering toward bankruptcy. 

Then Westmoreland Coal announced on May 22 of this year that it had secured a new financing commitment for $110 million in order to pay debts.

The Westmoreland Kemmerer Mine is currently working with WYDOT on a Highway 30 move to expand the mine. The $30 million project will use state funds from this state legislative session’s State-Funded Capital Construction Bill, HB0194, which was passed and signed by Gov. Matt Mead in March.

Westmoreland is also required to contribute funding to the project. State Sen. Dan Dockstader (R-Senate District 16, Lincoln, Sublette and Teton counties) told the Gazette in April that the highway move and mine expansion will open up an additional 67 million tons of coal.

At the publishing of this article, Westmoreland will essentially be entering Day 3 of bankruptcy, so details about the future of the expansion project in Kemmerer and other Westmoreland plans is still unknown.

Concerns about the future of Westmoreland and the Kemmerer coal mine surfaced in the community in late April, when Westmoreland leadership met with regional leaders from the United Mine Workers of American union (UMWA) in Kemmerer for a collective bargaining effort.

After that meeting, the UMWA was able to extend the union’s contract with Westmoreland, a victory for local miners and union members that prevented loss of pension and healthcare.

The average annual production of coal at the Kemmerer Mine is 4.8 million tons. At last count, the mine employed approximately 300 people.

The Kemmerer Mine is a special bituminous coal mine because of the unique coal deposits found there.

In July of 2017, Westmoreland Coal Company announced that it amended an agreement with PacifiCorp to sell approximately 1 million additional tons of coal from Kemmerer during 2018 than previously expected. The additional sales were the result of PacifiCorp’s plan to extend its Naughton Unit 3 operations through the end of 2018.

The Gazette will continue to update this story as Westmoreland’s bankruptcy court proceedings continue.