The United Mine Workers 1974 Pension Plan and Trust isasking a bankruptcy court to temporarily lift a stay on arbitration proceedingswith Peabody EnergyCorp. to settle an alleged $644 million dispute over miner pensions.
Court documents filed with the U.S. Bankruptcy Court for theEastern District of Missouri indicate that the court dispute concerns Peabody'stransfer of miner pension liabilities to wholly owned subsidiary in 2007 andthe subsequent spin off of Patriot.
"These transactions to rid Peabody of its unionobligations included all of Peabody's pension obligations, and a principalpurpose of the transactions was to avoid Peabody's withdrawal liability to the1974 Pension Plan by transferring that potential liability to Patriot,"the court document said.
Patriot had insufficient assets to continue contributing tothe plan, whose beneficiaries included 11,000 retired coal miners who worked atPeabody but never Patriot, and later rejected its collective bargainingagreements while under bankruptcy in 2015, according to the document.
"The 1974 Pension Plan formally determined afterPatriot withdrew that a principal purpose of the Patriot spin-off was to evadeor avoid Peabody's obligations to the 1974 Pension Plan," the documentsaid. "Among other things, the 1974 Pension Plan determined that Peabodyis liable for its share of the withdrawal liability triggered by Patriot'swithdrawal from the 1974 Pension Plan in an amount no less than $644,213,302."
Peabody and the pension entered arbitration over the disputewith the American Arbitration Association, and the 1974 Pension is requesting alift of the automatic stay solely to deal with adjudicating over the matter.The document said, "the 1974 Pension Plan does not seek to enforce anyarbitration award at this time."
Peabody said it believes that it has no liability withrespect to the claim filed by the union pension plan and the matter is properlydealt with in the bankruptcy court.
"No Peabody company is a signatory to a labor agreementthat requires contributions to the multi-employer UMWA Pension Plan. PatriotCoal was highly successful when it became an independent, publically tradedcompany in 2007 with a market value that grew 360% — from $1 billion to $4.6billion — in less than a year," the company said in a statement to S&PGlobal Market Intelligence.
"Moreover, at that time, Peabody had data that showedthe [plan] was well funded at a greater than 90 percent level."
The motion will go before a judge Oct. 18.