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Interior, union object to Westmoreland Resource Partners' bankruptcy plan

The U.S. Department of the Interior and the United Mine Workers of America both recently filed objections to Westmoreland Resource Partners LP's plan to liquidate.

The company, which served as the master limited partnership of now-defunct Westmoreland Coal Co., recently requested a 60-day extension to file its Chapter 11 bankruptcy reorganization plan.

Though the proposed buyer for Westmoreland Resource Partners' Kemmerer coal mine in Wyoming rescinded the offer in April, the coal miner told the U.S. Bankruptcy Court for the Southern District of Texas that a credit bid purchaser had reached an agreement in principle to sell the mine to Kemmerer Operations LLC, a Delaware limited liability company formed by the master limited partnership's secured lenders. Kemmerer Operations has to reach a deal with the labor union at the mine as well as attain replacement surety bonds.

The United Mine Workers of America wrote in a May 24 limited objection to the plan that it cannot be confirmed until there is a collective bargaining agreement entered into with the union "that would govern the labor relations existing at the debtors' Kemmerer mine." The parties are working on an agreement but have not reached one.

A U.S. attorney acting on behalf of the Department of the Interior wrote in a May 23 limited protective objection that, in theory, debtors or interested parties could waive the proposed plan's condition that Westmoreland Resource Partners close on the mine's sale before the plan is confirmed. If that were the case, the reorganization plan would not meet requirements under federal law, according to the filing.

The plan assumes that the buyer of the mine will assume its reclamation obligations, among other liabilities, and without a buyer, "the plan does not appear to provide for full compliance with such legal requirements and would be not feasible and would be forbidden by law."

"Without the Kemmerer sale, the proposed plan does not meet this requirement because it fails to provide for the compliance obligations for the Kemmerer mines," the attorney wrote.

The debtor owes the Interior about $1.4 million in cure costs.