CHARLESTON, W.Va. -- Patriot Coal has reached an agreement in U.S. Bankruptcy Court in St. Louis over benefits for its retired salaried employees.
"Through extensive negotiations, which ended only about 24 hours before the case was due to be litigated, we reached an agreement allowing a significant portion of the benefits to be kept for retirees," Jon Cohen, a lawyer with Stahl Cowen Crowley in Chicago who represents the salaried retirees, said Thursday.
The company's much larger fight, over employee and retiree benefits for union workers, remains.
Nearly 1,000 salaried retirees and their families, Cohen said, represent between 3 percent and 4 percent of all Patriot retirees.
"The salaried benefits at issue constitute only a fraction of the long-term retiree obligations that the company was carrying on its books," Cohen said.
Under the settlement for salaried retirees, money from Patriot Coal will be used to create some kind of HRA (Healthcare Reimbursement Agreement) for those retirees. It also will continue to provide life insurance benefits, which will be capped at $30,000.
"On the whole, the retirees, in the context of a Chapter 11 bankruptcy, fared fairly well, compared to many other Chapter 11 bankruptcies where retirees' benefits are on the chopping block," Cohen said.
The bankruptcy court approved the settlement with salaried retirees Tuesday.
Janine Orf, Patriot Coal's vice president for investor relations, said Thursday, "All of our employees and retirees are being asked to make sacrifices to help Patriot emerge from bankruptcy.
"These sacrifices include reductions in compensation and benefits for salaried, union and nonunion employees. The modifications approved in this order are expected to save Patriot $26.5 million in total cash costs over the next five years."
According to the deal, Patriot will pay $4 million into a plan administered by a trustee to pay benefits for its nonunion salaried retirees.