CHARLESTON, W.Va. -- The word "scam" once described the tactic of bleeding assets from a corporation, then filing bankruptcy to leave creditors stuck. The United Mine Workers of America alleges that something similar may have occurred in regard to Patriot Coal Corp.
"Patriot was a company created to fail," the latest UMW Journal says. It relates that Peabody Energy put its unionized mines into Patriot in 2007, making Patriot liable for pensions and medical insurance for multitudes of retired West Virginia miners. A federal filing said Patriot accepted $617 million in retiree medical obligations.
Meanwhile, Arch Coal did likewise, selling union mines to Magnum Coal. Then Magnum and Patriot merged -- and later filed bankruptcy, which possibly could wipe out pension and health insurance obligations. UMW President Cecil Roberts said:
"This house of cards -- purposely created by Peabody and Arch in an attempt to get out of their responsibilities to their retired and active UMW workers -- collapsed. And that is just what Peabody and Arch intended to happen."
As reporter Ken Ward Jr. outlined, the fate of about 2,000 current Patriot union miners in West Virginia and Kentucky -- plus more than 10,000 retirees and another 10,000 dependents -- hinges on the bankruptcy case. If pensions and health insurance are halted, enormous hardship would result.
President Roberts is to lead a Charleston UMW meeting at 10 a.m. today in the Civic Center to discuss this looming problem. During a Tuesday session at Evansville, Ind., he told 3,000 union members:
"This was just a paper trick. ... Peabody intentionally created this. ... We think Peabody still has an obligation to these retirees who last worked for them. Ninety percent of these people never worked a day for Patriot. Peabody has lots of money."
Patriot reported nearly $240 million losses in the past 27 months, while Peabody reported $1 billion profit.
Roberts said union members may not have clear legal standing to act against Peabody, "but we have a great deal of moral standing."
The Patriot bankruptcy was filed in New York City, where two Patriot subsidiaries were created only in June. The union wants the case moved to Charleston, close to many affected people. Attorney General Darrell McGraw and President Obama's Justice Department support this request. We hope more West Virginia leaders become involved in the effort to help thousands of endangered Mountain State miners and retirees.
Meanwhile, perhaps the governor and Legislature could investigate to learn whether the UMW is correct in contending that the Patriot bankruptcy was deliberately planned, long in advance.