Cambrian Coal Corp. could be heading toward a "fire sale" resulting in the company receiving far below the market value of its coal assets, an unsecured creditor warned the U.S. Bankruptcy Court for the Eastern District of Kentucky on Aug. 1.
Key-Way LLC is objecting to the planned bidding and bankruptcy sale procedures proposed by Cambrian, which sets an Aug. 28 bid deadline and Sept. 4 auction date that closely follows the Booth Energy Group subsidiary's June petition for a bankruptcy court reorganization. As one of the largest unsecured creditors in the bankruptcy case, Key-Way raised concerns as to the extent to which the coal assets have been marketed as a going concern or otherwise.
"Key-Way respectfully submits that it will be impossible to realize a sale price anywhere close to market value under these proposed deadlines," the filing states. "Unsecured creditors, in this case, can expect nothing less than a fire sale result far below market value if the pending motion to establish bidding and sale procedures is sustained."
According to Key-Way, there has been no indication of how many potential buyers were contacted or expressed interest in the assets. The creditor said that at a recent hearing, a representative of the debtor said no offers had been received.
Key-Way suggested the proposed auction should occur within no less than six months and only after the debtors' businesses were professionally valued by forensic accountants or other qualified professionals as a going concern. Natural Resource Partners LP also recently objected to Cambrian's bankruptcy sale plan.