Metallurgical coal producer Corsa Coal files for Chapter 11 bankruptcy

Pennsylvania-based coal producer Corsa Coal Corp. filed for voluntary Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Western District of Pennsylvania on Jan. 6.

Metallurgical coal producers have had their margins squeezed by lower steel demand in recent months. Corsa, which produces low-volatile coal used in the steelmaking process, received a $15 million debtor-in-possession financing package through KIA II LLC to support operations as the company proceeds with a sale of its assets.

"Customary motions have been filed with the U.S. Bankruptcy Court to support the continuation of our daily operations for customers, employees and vendors, and we expect to continue to deliver the metallurgical coal that our customers depend on," said Kevin Harrigan, Corsa president and CEO.

The company said it made the decision to seek bankruptcy protection due to various reasons including business performance, cash position, anticipated revenues and expenses, and liquidity issues resulting from obligations owing to creditors. Corsa said it has been seeking "extensive refinancing" and assessing potential sales and other alternatives since the first quarter of 2024.

Corsa sold 727,613 short tons of metallurgical coal in the first nine months of 2024 and reported a net loss of $26.8 million for the period, according to a Nov. 26, 2024, securities filing.

Weaker demand from steel producers in China and India has been keeping a lid on metallurgical coal prices, S&P Global Commodity Insights analysts Sylvia Cao and Paul Bartholomew said in a Commodity Briefing Service report published Dec. 20, 2024.

Corsa also said Jan. 6 that its Wilson Creek Holdings Inc. subsidiary had sought a Rural Development Business and Industry loan guarantee through the US Department of Agriculture, but the "application was not approved on a timely basis."

The company had intended to use the $25.0 million term loan, 80% guaranteed by the USDA, to refinance an existing term loan. Corsa's term loan under the Federal Reserve's Main Street Lending Program had an outstanding balance of $16.3 million as of Dec. 31, 2024.

Corsa's larger creditors include rail service provider Norfolk Southern Corp. and manufacturer Jennmar Corp., according to a Jan. 6 court filing. Norfolk Southern and Jennmar hold unsecured claims of $2.8 million and $1.8 million, respectively.