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Court approves Blackjewel's plan to transfer eastern permits for western sale

A federal court approved Blackjewel LLC's plan to transfer the permits and reclamation obligations related to its remaining eastern assets to an affiliate of FM Coal LLC, freeing the debtor to sell its Powder River Basin mines.

Blackjewel filed for bankruptcy protection in July and has since tried to sell most of its assets.

Eagle Specialty Materials, an affiliate of FM Coal, is seeking to purchase Blackjewel's Powder River Basin mines but must obtain replacement bonding to guarantee the reclamation obligations before that sale can close. Blackjewel sought an order allowing it to transfer about 135 of the permits and reclamation obligations related to its remaining eastern assets.

Two insurance companies agreed to provide the bonding needed for the western assets but required an affiliate of Eagle Specialty's parent company to accept the transfer of the eastern permits and obligations, which are guaranteed by about $100 million of bonding from one of the insurers.

Neither FM Coal nor its affiliate that is taking on those obligations is acquiring any equipment or real property related to the eastern assets, according to an Oct. 11 court filing with the U.S. Bankruptcy Court for the Southern District of West Virginia.

The court also approved Blackjewel's deal to sell its 30% limited-partnership interest in Blackjewel Marketing and Sales Holdings LP, a separate entity from the debtor, to Javelin Global Commodities (US) LP for $125,000. That sale was necessary to effectuate the Powder River Basin sale, given the "insurmountable challenges" posed by Contura Energy Inc.'s bid to take on those assets, according to court documents.

"In light of the circumstances of these cases and the prior sale process, the sale of the purchased assets to Javelin pursuant to the terms of the sale agreement and the sale order, without a further sale process or auction, is in the best interest of the estates and constitutes the best opportunity to maximize the value of the debtors' estates," the court said.