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Creditors seek to liquidate Paringa's Ky. coal unit after failed bankruptcy sale

A committee of unsecured creditors asked a bankruptcy court to convert Paringa Resources Ltd. unit Hartshorne Mining Group LLC's Chapter 11 reorganization to a Chapter 7 liquidation, alleging the company is unlikely to restructure successfully.

In their conversion request filed with the U.S. Bankruptcy Court for the Western District of Kentucky on June 23, the creditors said Hartshorne is incurring significant operating losses and that continuing the Chapter 11 process will require substantial administrative costs. They added that the designation of a Chapter 7 trustee "is needed to prosecute certain claims and causes of action to administer the estate in an efficient wind-up of the debtor's estates."

The company once touted its assets in Kentucky as the first new mines targeting thermal coal markets to open under U.S. President Donald Trump's pro-coal administration. Hartshorne filed a petition for Chapter 11 bankruptcy reorganization on Feb. 20, citing market conditions and technical challenges to getting its Poplar Grove mine in the Illinois Basin operating at full capacity. In May, Hartshorne applied for a $2.3 million loan under the Paycheck Protection Program but was denied as it was in the middle of a bankruptcy restructuring.

Since Hartshorne began exploring the possible sale of its business in November 2019, the company has faced operational and technical issues with its mines, according to the creditors. The producer failed to receive any qualified bids for its assets by and since the June 4 deadline.

"The debtors' Chapter 11 cases are simply not in the best interests of the estates or their unsecured creditors," the committee said. "There is absolutely no benefit for the debtors to maintain the business, operating on negative cashflow (even excluding the cost of bankruptcy), waiting to see what assets [its prepetition lender, Tribeca Global Resources Credit Pty Ltd.,] will cherry pick from the estates, and clearly running toward administrative insolvency and an eventual conversion, which also may be an appropriate remedy at this time."