Cambrian Coal Corp.'s official committee of unsecured creditors filed a limited objection with a federal bankruptcy court asking it not to provide the coal producer with "unfettered authority" to enter into a stalking horse agreement.
The debtors have not identified a stalking horse bidder for their assets despite the July 31 deadline to do so, according to an Aug. 2 filing with the U.S. Bankruptcy Court for the Eastern District of Kentucky. The company has also failed to attach a form asset purchase agreement or set other "clear parameters" for a stalking horse bid, such as requiring a minimum price.
Cambrian and its affiliates have requested pre-approval to enter into stalking horse agreements without any party's notice or court approval, the filing states. The debtors may use or sell the assets if they have a good business reason for relief, but the court and committee need to see an asset purchase agreement before accepting a bid.
"Moreover, because the Debtors also request the authority to grant the Stalking Horse Protections under a Stalking Horse Agreement, they could be unilaterally binding their estates to millions in liabilities without any vetting of the Stalking Horse bidder, the financial terms of its bid or the obstacles to closing," the committee stated.
The court should require the debtors to file a stalking horse agreement with the court and establish time for interested parties to object before allowing Cambrian to enter into the agreement, according to the filing.
The debtors, lenders and committee reached an agreement on the debtor-in-possession financing and pushed the sale milestones back two weeks, according to the filing. Under the agreement, potential buyers would need to submit bids by Sept. 11, followed by a Sept. 18 auction and Sept. 19 sale hearing.
The committee also wrote that the company should not demand that each bidder replace the debtors' black lung liabilities and obligations to the Kentucky Department of Workers' Claims.
"While a bidder's willingness to assume these liabilities may be a material 'plus factor' for a bid, it should not be mandated by the Bidding Procedures," the company stated.
One of Cambrian's largest creditors and Natural Resource Partners LP have objected to the company's bidding procedures, asset sale and auction plan as well.