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Laid-Off Employees Of Bankrupt Blackjewel Mining Seek Pay, Answers

Patrick Fitchpatrick has worked at Blackjewel’s D-11 coal mine in Cumberland, Kentucky, for a year and a half. He says he enjoyed the work right up until he was told not to come in last Monday.

“Everything was fine,” he said. “Everything was smooth sailing and then one day it just all goes to hell.”

The country’s sixth-largest coal company filed bankruptcy last week, and many of Blackjewel’s 1,700 workers in Wyoming and across Kentucky, Virginia, and West Virginia were suddenly out of work.

Then Fitchpatrick got more bad news, this time from the bank: His paycheck bounced. Fitchpatrick said he has yet to receive some $4,200 in owed wages. The father of two just bought a house and truck. Now he’s struggling to pay his bills.

“I’m having to sell my tools, my guns, everything that I’ve worked hard for just to make ends meet,” he said.

More than a hundred coal miners and their family members in similar situations gathered Wednesday in Whitesburg, Kentucky, in an attempt to get some answers and some of their pay from the failed mining company. Miners from across the region are largely still waiting for back wages as well as answers about the company’s future.

Chaotic Ten Days

The coal industry is no stranger to bankruptcy. Over the last decade a wave of bankruptcies roiled the business as major players including Alpha Resources, Peabody Energy, and Arch Coal sought to restructure under Chapter 11 protection.

But since its surprise filing on July 1, Blackjewel’s bankruptcy has been anything but routine.

“Obviously I don’t think last week went the way anyone was hoping or expecting,” attorney Travis McRoberts explained in a bankruptcy court hearing Saturday. McRoberts is with the firm Squire Patton & Boggs which is representing Blackjewell LLC.

Federal bankruptcy Judge Frank Volk called the hearing to discuss problems with company paychecks.

“It has visited as we all know a significant hardship on these employees and their families,” Volk said.

Last week, Volk approved a $5 million loan to Blackjewel to help keep it afloat on the condition the company’s CEO – Milton, West Virginia, resident and multi-millionaire Jeff Hoops – would resign.

But McRoberts told Volk the company needs more money, a lot more. It owes tens of millions in unpaid local, state and federal taxes, mineral royalties, bills to vendors, and fines for environmental and mine safety violations.

The amount of debt leaves some industry observers aghast.

“When you look at the list of debt, it’s just like, holy cow. You know, how do you get this far in debt?” Clark Williams-Derry said. He directs energy finance at the Sightline Institute, a Seattle-based think tank that works on environmental and economic sustainability issues. He said Blackjewel’s bankruptcy has been unusually chaotic.

“How do you get this far behind on your payments with $100,000 in the bank and not think you’re getting close to bankruptcy?” he asked.

At the Saturday hearing, Blackjewel’s lawyers told the court that without another infusion of cash, it can’t pay its Appalachian employees. Currently, the company is only paying workers in the region once they are called back to work. And so far, few have gotten that call.

Documenting Loss

At the Wednesday information session in Whitesburg Blackjewel employees and their families packed the Letcher County Recreation Center.

Miner Stacy Trotter, 43, who worked at a mine in Harlan County, said he found out about the layoffs when he checked Facebook after coming home from a 17-hour shift.

“I’m about to lose everything,” he said. “I got a sick kid and no insurance … no money to feed him.”

Trotter said his paycheck had been taken out of his account after he had already spent some of it, leaving him with an overdraft of $3,200 in his bank account. Trotter said he doesn’t know when he might be called back to work.

County officials and attorneys urged employees to keep paperwork documenting their hardships from the sudden layoffs and lost pay.

“You have rights under state and federal law to receive the wages that you earned,” attorney Sam Petsonk with the public interest law firm Mountain State Justice told the crowd. Petsonk said that in addition to the missing pay, he’s concerned about the company’s required payments to employee retirement plans and health savings accounts.

On Tuesday, lawyers representing a Wyoming employee of Blackjewell filed a class action lawsuit alleging the company failed to provide adequate notice of the layoffs under the Worker Adjustment and Retraining Notification Act of 1988, more commonly known as the WARN Act.

“This is actually the type of case that Congress really intended the WARN Act to protect against,” said Stuart Miller, an attorney with Lankenau & Miller, LLP, who is leading the case. “Had the employer given the 60 days notice, as the acronym indicates, it gives the employees the opportunity to seek new employment, to seek new training over a 60-day period, which would certainly mitigate the devastation that is caused by a sudden closure of a facility like this.”

Kentucky Attorney General Andy Beshear has opened an investigation into the Blackjewel bankruptcy and assigned a mediator to help employees deal with debts that resulted from bounced paychecks. Governor Matt Bevin announced that the state Labor Cabinet is also looking into the matter.

Broken Trust

Bobby Balthis was among the miners at the Whitesburg event Wednesday. He worked at Blackjewel’s Clover Lick 3 mine in Harlan County. He said he was able to cash his last paycheck but then it was “clawed back,” or made void after deposit.

“They actually took the check that I had cashed out of my savings and then charged me $12 for the company’s check that had bounced,” Balthis said.

The Kentucky Department of Financial Institutions issued a statement Wednesday encouraging banks to help affected customers by extending loan repayment terms and waiving overdraft fees, but it comes a bit late to help Balthis.

He said he knows many who are hurting who were living from paycheck to paycheck. As a veteran of the mining business, he had put some money aside in case of a layoff.

“I’ve been doing this for 27 years and you can’t never trust the coal industry because you don’t know one day to the next,” he said.

Blackjewel’s next bankruptcy court hearing is scheduled for Friday. The court is set to consider a series of procedural motions filed by the company. Additional financing is not currently on the agenda.

Judge Approves $5M Loan to Ailing Blackjewel Coal, But CEO Hoops is Out

This story was updated on 7/5/2019 at 11:15 a.m.

A federal bankruptcy court in West Virginia has granted a request by West-Virginia based coal company Blackjewel LLC to borrow $5 million to stay afloat, on the condition the company’s president and CEO, Jeff Hoops, resigns.

The payment, which will be provided by Riverstone Credit Partners – Direct LP, could be used in part to pay employee salaries and benefits, according to an order signed Wednesday afternoon.

In exchange, neither Hoops, a longtime coal executive and Milton, West Virginia, resident, nor his family are authorized to conduct business on behalf of the company.

Blackjewel sought approval for the $5 million emergency loan after District Judge Frank Volk on Tuesday rejected a $20 million financing agreement proposed by the company.

The company said the approved $5 million credit line will allow management to conduct maintenance activities at abandoned mines, provide onsite security and ensure mining equipment isn’t damaged as Blackjewel seeks additional financing.

A weekly budget document shared with the court showed the company needs almost $2.7 million to pay employees and vendors.

Blackjewel and its affiliate Revelation Energy LLC control 24 active metallurgical coal mines and processing and prep facilities in Virginia, Kentucky, and West Virginia that employ about 1,100 workers.

The company also controls two large coal mines in Wyoming’s Powder River Basin region. On Tuesday, hundreds of workers at the Belle Ayr and Eagle Butte mines were sent home, an unusual move during a bankruptcy proceeding.

It’s less clear if layoffs are happening across the company’s Central Appalachian mines.

Frank Taylor, manager of the Virginia Employment Commission’s Richlands office, which represents Buchanan, Russell, and Tazewell counties, said he was not aware of any layoffs.

Blackjewel operates six active mines in those counties, according to data from the Mine Safety and Health Administration.

In Harlan County, Kentucky, Dan Mosely, county judge executive, said his office was hearing from Blackjewel workers whose paychecks were bouncing. Mosely said in the past he has received official notice under the Worker Adjustment and Retraining Notification Act of 1988, more commonly known as the WARN Act, when coal mines laid off workers.

In an all staff email sent Thursday, Hoops said that in the days leading up to Blackjewel filing for bankruptcy, the company struggled to secure additional financing. Hoops noted he had personally loaned the company $11 million, but was advised by financier Riverstone not to continue that practice.

He said he became aware that paychecks issued to the company’s hundreds of Wyoming employees were not clearing Friday afternoon and “immediately got United Bank on the phone to find out why.”

“I realize we have over 1,800 hurting people out there right now and no one is hurting more than me over what has occurred in the past eight days,” Hoops wrote.

Over the Fourth of July holiday, Judge Volk called a hearing with counsel to discuss the issue of employees not getting paid. In a Friday morning follow-up call with counsel, a representative said because of the holiday, they were unable to reach anyone at United Bank, but are working to get the issue resolved in Wyoming.

Travis McRoberts, an attorney with Squire Patton and Boggs, representing Blackjewel, told the judge they are working to ensure Blackjewel employees at its Appalachian mines that return to work “at our current reduced operating capacity” received any owed wages as quickly as possible.

Major Appalachian Coal Company Files For Bankruptcy Protection

In what is the latest sign of problems for the U.S. coal industry, one of the country’s largest coal producers has filed for Chapter 11 bankruptcy protection.

West Virginia-based Revelation Energy LLC and its recently-formed affiliate, Blackjewel LLC, began the bankruptcy reorganization process in the U.S. Bankruptcy Court for the Southern District of West Virginia on Monday.

The companies, owned and controlled by Milton, West Virginia, resident Jeff Hoops, a longtime coal executive, employ about 1,700 employees across its Central Appalachian coal mining holdings and two large Wyoming coal mines, which were acquired in 2017.

In court documents, Revelation Energy listed 24 metallurgical coal mines and processing and prep facilities in Virginia, Kentucky, and West Virginia, as principal assets that employ 1,100 workers. The Appalachian mines have an estimated 600 million reserve tons of coal. Last year, the company mined 3.3 millions tons. The federal government’s Energy Information Administration said in 2017 that the companies’ combined output made them the country’s sixth-largest coal producer.

The companies owe millions of dollars in coal royalties, for goods and services and in taxes, which could affect government revenue in Kentucky and Virginia. According to court filings, in Kentucky state officials are owed more than $6 million in taxes. In Virginia, officials are owed $1.6 million in taxes.

The companies estimate they owe $156 million for goods and services across all properties, including $6.1 million to Rich Creek, Virginia-based United Industrial Services, Inc., and $2.7 million to Walker Machinery in Belle, West Virginia.

In a filing by Hoops in support of the bankruptcy petition, he said the companies turned to bankruptcy in large part due to adverse market conditions for coal. Hoops cited reduced demand coal-fired electricity due to the rise of cheaper forms of energy like natural gas and renewables, increased environmental scrutiny and an overall coal market downturn.

“The impact of the macro and regulatory environment is not isolated to the Debtors Performance,” he wrote. “The entire U.S. mining complex has been impacted by these events.”

However, Hoops also laid out a series of unique operational issues that have plagued the companies since 2017. For example, a November 2017 roof collapse at the Lone Mountain mining complex located in Virginia and Kentucky cost the company an estimated $1.4 million in lost revenues.

A 2017 change to Kentucky workers’ compensation laws resulted in an increase in workers’ compensation insurance rates that cost the company $20 million.

According to documents, the largest debts are owed in relation to Blackjewel’s two Wyoming properties — the Eagle Butte and Belle Ayr mines. The Hoops businesses owe $60 million in royalties to the U.S. Department of the Interior and $37 million in county taxes.

Blackjewel purchased the two Powder River Basin mines in late 2017 from Contura Energy, which was seeking an exit from the thermal coal industry. As part of the sale, Contura said it expected to write off more than $400 million in taxes and about $200 million in reclamation liabilities.

Wyoming environmental regulators temporarily blocked the sale of the Wyoming mines to Hoops, citing 42 mine permit violations at Revelation Energy’s Central Appalachia mines.

In a statement, Joyce Evans, chair of the Powder River Basin Resource Council said the bankruptcy announcement was not surprising. The nonprofit group opposed the sale of the Wyoming mines to Hoops in part due to his track record in Appalachia. In one example, a Hoops mine in Kentucky faced potential regulatory action for not addressing violations.

“The entire history of the company’s involvement in Wyoming has had red flags, starting with the fact they were essentially gifted the Belle Ayr and Eagle Butte mines by Contura to rid themselves of the liability,” Evans stated. “And importantly, Blackjewel’s owner, Jeff Hoops, is no stranger to both mine safety and environmental violations at his Appalachian companies, which is why we challenged them even being allowed to operate here.”

An April investigation by the Ohio Valley Resource, found Hoops is responsible for more than $926,000 in delinquent mine safety mines from citations from the federal Mine Safety and Health Administration.

Hoops began his career with Consol Energy at the age of 17, according to a biography on Marshall University’s website. The Hoops Family Foundation is known for its philanthropy in the area. The children’s wing at Cabell Huntington Hospital, for example, bears the Hoops name. The family is also involved in a multi-million dollar project to create a 189-acre resort in Milton complete with 100-room hotel, wedding chapel, horse stables and a nine-hole golf course.

The suit seeks to combine bankruptcy proceedings involving four companies — Revelation Energy LLC, Revelation Energy Holdings LLC, Revelation Management Corp. and Blackjewel Holdings LLC — into one case under the name Blackjewel LLC.

Chapter 11 protection makes a company free from threat of lawsuits from creditors while reorganizing finances. A majority of the company’s creditors must approve the reorganization plan.