Walter Energy Canada, a wholly-owned subsidiary of US coal company, Walter Energy, has obtained protection under the Canadian Companies’ Creditors Arrangement Act (CCAA), allowing the company to maintain ongoing operations at both its Canadian and British assets, while it tries to find a buyer for them.
According to PwC Canada, the CCAA allows a company “to restructure its financial affairs […] to avoid bankruptcy and allows the creditors to receive some form of payment owing to them by the company.”
Walter Energy’s US operations entered into Chapter 11 Bankruptcy earlier this year. It recently entered into an asset purchase agreement with a newly-formed company owned by members of its senior lender group for its Alabama assets.
That process has raised controversy after the company sought court approval to end employment agreements with its unions and stop funding retiree benefits as preconditions of the asset sale – a move the United Steelworkers union described as a “classic case of a bankrupt company trying to take advantage of temporary issues […] to avoid pension and retiree insurance obligations and slash wages and benefits.”
The company has defended its actions, saying it has little choice. “As a result of the market conditions we face today, the choice is between taking these steps or no longer operating,” Walter spokesman William Stanhouse told the Wall Street Journal.
Walter’s Canadian and British assets are currently idled as a result of market conditions. In Canada, the company owns three metallurgical coal mines: the Wolverine mine, the Brule mine and the Willow Creek mine. It also owns the Aberpergwm mine in South Wales, UK.
Walter Energy is one of a number of US coal companies to enter into bankruptcy, following Patriot Coal and Alpha Natural Resources. Meanwhile, Arch Coal has warned that it may enter into Chapter 11 bankruptcy in early 2016.
Edited by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/coal/08122015/walter-energy-canada-enters-ccaa-protection-/