A group of Westmoreland Coal Co.'s creditors urged their counterparts to vote to reject the company's restructuring plan, saying the original disclosure statement "provided nothing even approaching adequate disclosure for general unsecured creditors."
While the plan has been revised, the Official Committee of Unsecured Creditors wrote in a Dec. 10 filing with the U.S. Bankruptcy Court for the Southern District of Texas that it is still not satisfied. The revised disclosure statement says Westmoreland's unencumbered assets do not hold value, while the committee believes those assets may provide "substantial recoveries" for the unsecured creditors. The committee is investigating the value of the company's unencumbered assets and "claims that could be brought against insiders and pre-petition lenders."
"Unfortunately, despite the fact that the original plan and disclosure statement promised unsecured creditors their pro rata share of the general unsecured claims amount, the disclosure statement has now been revised to make clear that the plan actually provides no recovery whatsoever for unsecured claims," the committee wrote.
Westmoreland filed for Chapter 11 bankruptcy in October and plans to emerge by the end of February. The acting U.S. trustee for the southern and western districts of Texas and the United Mine Workers of America filed separate objections to the disclosure statement within the last few weeks. A creditor has also challenged the coal producer's selection of a management consulting firm to help the company navigate its bankruptcy proceedings.
Westmoreland included several of the creditors' suggested disclosures in the revised statement, so the committee is not yet objecting to the revised disclosure but may do so depending on the findings of its investigation. So far, it has identified several categories of assets, including tax attributes and interests on owned and leased real estate, that were not included in the liens identified by the company's lenders, according to the filing.
Westmoreland did not respond to a request for comment on the filing by this article's publication.