A federal bankruptcy court approved Mission Coal Co. LLC's employee retention plan, allowing it to pay $1.1 million total to 40 employees after the coal producer is sold or completes its reorganization.
Mission Coal, which filed for Chapter 11 bankruptcy reorganization in October, employs about 800 people, according to an order filed in the U.S. Bankruptcy Court for the Northern District of Alabama on Dec. 27. About 400 of those employees are union workers whose compensation and benefits are covered by a collective bargaining agreement with the United Mine Workers of America and were excluded from the retention plan.
Judge Tamara Mitchell, who approved the plan, said that although mining coal is a dangerous job, the miners' jobs are critical to the mine and "may be the most stable," while the salaried employees are at greater risk of being replaced by a new owner and need an incentive to stay through the bankruptcy proceedings.
Mission Coal's chief restructuring officer, Kevin Nystrom, told the court that replacing the salaried employees "could be difficult since the new employee's employment could potentially be brief."
The retention plan "is a reasonable exercise of the debtors' business judgement," Mitchell ruled.
The employees must remain with the company to receive the benefit and will not be paid until the company is sold or reorganization is confirmed. The benefits under the retention plan, about 10% to 30% of the employees' annual salaries, range from $81,250 for a general manager to $4,400 for a senior accounting associate.
Mitchell also continued the company's motion for approval of its key employee incentive plan, a separate initiative that provides up to $281,875 to entice two management members to meet challenges related to the sale and pricing goals. A committee of Mission's unsecured creditors objected to the incentive plan.