Bankruptcy Affects More Than Patriot Coal's Retired Miners

fromKWMU

Retired miners are converging on St. Louis Tuesday for a union rally to protest a proposed cut in health benefits. Patriot Coal is in bankruptcy and has asked a federal judge to allow it to shed most of the health coverage for nearly 10,000 retired miners. But most of those miners never worked a day for Patriot.

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Hundreds of retired miners are expected to be protesting in St. Louis today. They are upset about a plan that the Patriot Coal Company has filed in bankruptcy court, seeking to shed much of the health coverage it provides to nearly 10,000 retired miners. We should note, most of those miners expected to be protesting never worked for Patriot, a company spun off on the biggest U.S. coal company, St. Louis-based Peabody Energy.

St. Louis Public Radio's Maria Altman reports.

(SOUNDBITE OF PROTESTORS CHANTING)

MARIA ALTMAN, BYLINE: St. Louis has been the site of several rallies by the United Mine Workers this year, with retired miners marching from Peabody Energy's headquarters downtown to a federal courthouse a few blocks away.

Most of the miners protesting here worked for Peabody Energy and another St. Louis-based company, Arch Coal. But it's the bankruptcy of a third company called Patriot Coal that's affecting thousands of miners from across southern Illinois, Indiana, Kentucky, Ohio and West Virginia.

Last month, it was Patriot that asked a federal judge here to allow it to drop much of the $1.6 billion in health benefit liabilities it says it can't afford to pay.

UMWA president Cecil Roberts says that's just not fair.

CECIL ROBERTS: Patriot is paying the obligations of two of the largest coal companies in the world. Both coal companies are very profitable, and people who've never worked for Patriot are asking me: How can Patriot going into bankruptcy have anything to do with my health care?

ALTMAN: Here's how: Patriot was spun off from the much bigger Peabody Energy in 2007, along with thousands of retired miners' benefits. Just one year later, the young spin-off bought another company, which owned several former Arch Coal subsidiaries and its retirees' obligations.

The UMWA alleges in a lawsuit that Peabody Energy created Patriot essentially to take on liabilities and then purposely fail.

VIC SVEC: That's interesting, and it's absolutely false.

ALTMAN: That's Peabody Energy's spokesman Vic Svec.

SVEC: While it was spun out with some liabilities, Patriot was also launched with almost no debt, and so it had an excellent chance of success. And it did succeed, dramatically, for a time.

ALTMAN: Patriot officials repeatedly declined to comment for this story. But CEO and President Bennett Hatfield has been blaming the five-year-old company's bankruptcy on the U.S. coal market's sharp decline, increasing environmental regulations, and legacy obligations - obligations like union retirees' health benefits.

The company has offered the union a 35 percent stake in a reorganized company if it will agree to a health care trust fund that would cost the company much less.

But for retired miners like Charles Whitlow who spent 33 years working for the still-profitable Peabody Energy, that doesn't seem like a good gamble.

Whitlow opens a kitchen drawer in his southern Illinois home and pulls out three plastic containers.

CHARLES WHITLOW: I think there's 12 pills there every morning, and there's six pills here for supper.

ALTMAN: He takes more than two dozen pills daily, some of them for coal-related health problems, including CWP, known as black lung. Last year, he says the cost of all those pills topped $13,000.

WHITLOW: I lost my trust I had in Peabody. I used to be proud to say that I did work for Peabody Coal Company, but I'm a long ways from telling anybody that now.

ALTMAN: Whitlow and his wife, Brenda, are among hundreds who've written letters to the bankruptcy court asking that Peabody be held accountable.

University of Illinois law Professor Robert Lawless says the judge's options are limited, though, because it's perfectly legal for corporations to spin off both assets and liabilities.

As for Patriot Coal, Lawless says a bankruptcy law does make it harder to drop retirees' health benefits, but he says it still happens, most recently with Hostess Brands Incorporated.

ROBERT LAWLESS: I think an important thing to keep in mind is there's no magic machine in the bankruptcy court that creates money that's not there. If the company can't afford to pay the benefits, it can't afford to pay.

ALTMAN: Patriot officials point to Hostess' liquidation as an example of just what might happen if retired coal miners don't agree to the concessions they're offering. That's an especially bitter pill to swallow for some retired miners who worked most - if not all - of their careers for companies that are still doing just fine.

For NPR News, I'm Maria Altman, in St. Louis.

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