In the company's bankruptcy filings, chief Patriot financial officer Mark Schroeder noted that the company is responsible for benefits to more than three times the number of retirees as Patriot currently employs as active miners.
Most of those retirees came from Peabody Coal, from which Patriot was formed in a corporate spin-off transaction in 2007, or from Magnum Coal, an Arch Coal spin-off company that Patriot bought in 2008.
"Especially in an era of declining demand and price for coal, there is a mismatch between the cost of [Patriot's] legacy obligations and [its] ongoing ability to generate revenue," Schroeder said in a sworn statement. "[Patriot's] return to long-term viability depends on [its] ability to achieve savings with respect to these liabilities."
Patriot noted that while only 11 percent of the nation's coal miners currently work under UMW contracts, 42 percent of Patriot's miners work under such agreements.
The company complained that the UMW's national contract, which Patriot works under, "contains many provisions that restrict the ability of signatory employers to deploy labor and operate their mines in a flexible and cost-effective manner, which puts signatory companies at a cost disadvantage with their union-free competitors."
In late May, prior to its bankruptcy filing, Patriot announced a major management shakeup that included promoting to president Ben Hatfield, who was previously CEO of non-union International Coal Group and an executive with non-union Massey Energy.
Patriot said its bankruptcy was prompted in part by the recent major downturn in the U.S. coal market. Patriot said, "Alternative sources of energy have become increasingly attractive to electricity generators in light of declining natural gas prices."
The company also cited "more burdensome environmental and other government regulations," noting its recent agreement to begin treating selenium pollution at its surface mines a move it said "will cost hundreds of millions of dollars."
When it entered that selenium settlement in January, then-Patriot CEO Richard Whiting said the deal was "a strategic response" to a pollution problem the coal industry needed to deal with. "We believe the consent decree serves the interests of both the public and our stockholders," Whiting said at the time.