Houston — Central Appalachian metallurgical and thermal coal producer Xinergy and its 25 subsidiaries have filed for Chapter 11 bankruptcy in Virginia, citing years of "significant challenges" in US coal markets as the main reason for a need to "undertake a financial restructuring and create a strong financial foundation for the company's future."
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"Over the past several years, the coal markets in the US have faced a number of significant challenges, including increased environmental regulations and reductions in demand due to weaknesses in the economy and lower natural gas prices," Xinergy CEO Bernie Mason said in a statement.
"Additionally, continued weakness in the market for metallurgical and thermal coal, combined with an extremely cold winter that impacted the mining and shipment of coal, has continued to erode Xinergy's cash position," Mason added.
Xinergy's operations include the Raven Crest and Brier Creek thermal coal mines in West Virginia, True Energy's high-volatility metallurgical coal surface mine site in southwestern Virginia and the mid-volatility metallurgical coal mines in the South Fork facility in southern West Virginia.
Xinergy is also seeking to obtain debtor-in-possession financing, which will provide an immediate source of funds that will allow the producer to continue to operate and pay employees. The company said it will continue operating and making customer shipments without interruption during the bankruptcy process.
Fellow Appalachian coal producer James River Coal filed for bankruptcy in April 2014 and sold off its final mine in February.
There seems to be no plan to close Xinergy as Mason said the company "will emerge from our Chapter 11 reorganization as a stronger, more competitive company that is well positioned for success in the coal industry."