| ST. LOUIS
ST. LOUIS May 3 A lawyer for the United Mine
Workers of America on Friday told a bankruptcy judge it would be
forced to strike if Patriot Coal Corp succeeds in
voiding its contract with the union, as five days of contentious
court hearings came to an end.
Attorney Fred Perillo said the union would do everything in
its power to reach a consensual agreement with Patriot, which is
seeking to impose $150 million a year in labor cuts.
But if Judge Kathy Surratt-States approves the proposal,
which would end pension contributions, alter healthcare and
lower pay rates, Perillo said a strike will follow.
"No contract, no work," Perillo said during closing
arguments to cap off the hearing in U.S. Bankruptcy Court in St.
Ben Hatfield, Patriot's chief executive, said later that
Perillo's remarks were ill-conceived.
"It's a poor time to be throwing out threats," Hatfield told
Reuters in an interview outside the courtroom. "I think reasoned
judgment will prevail when it comes to workers retaining their
jobs in this environment."
Hatfield said a UMWA strike would be a replay of what
happened in the bankruptcy of Hostess Brands Inc,
which last year liquidated after a union strike caused it to
Judge Surratt-States has until May 29 to rule in the Patriot
St. Louis-based Patriot declared bankruptcy in July amid
weak coal markets and heavy pension and healthcare costs, saying
it needed major concessions from unions to stay in business.
Patriot has proposed ceasing pension contributions and
transferring healthcare to a voluntary employees' beneficiary
association, or VEBA, stocking it with $15 million in up-front
cash and another $300 million in profit-sharing contributions.
It would give the union a 35 percent equity stake in
reorganized Patriot, which could be sold to help fund the
Without the cuts, the company has said it would be forced to
liquidate. The union, which represents about 1,700 current
Patriot workers and another 13,000 retirees and their families,
has called the proposal "nowhere near" fair, and staged heated
rallies in St. Louis, New York and elsewhere.
Bankruptcy laws allow companies to impose unilateral cuts to
labor contracts, but only if they can show the cuts are critical
to survival and that a good faith effort was made to achieve
Before the start of closing arguments on Friday, Patriot's
unsecured creditors' committee said it had withdrawn its initial
objection to the 35 percent stake.
Patriot lawyer Ben Kaminetzky in his closing argument
criticized the UMWA for casting the issue as a "Wall Street
against Main Street" class struggle, saying Patriot did not
begrudge the benefits and wages collected by union workers, but
simply "cannot afford them."
Kaminetzy balked at the union's position that it has been
asked to bear a disproportionate share of Patriot's cuts, saying
nonunion employees have sacrificed for years while union workers
have received "multiple raises."
Patriot reached consensual concessions from its non-union
workers last month.
One key topic on which the union and Patriot agree is the
liability of Peabody Energy, the former parent that spun
Patriot off in 2007. Patriot and the UMWA have filed lawsuits
seeking to keep Peabody on the hook if Patriot cannot afford to
The union has alleged that Peabody saddled Patriot with
unsustainable legacy costs, knowing it would eventually fail.
But Kaminetzky said the union "sounds like it wants to
reward Peabody with Patriot's liquidation" by resisting cutbacks
that are necessary for survival.
A Peabody spokesman on Friday declined to comment, but in
the past has said that the spinoff was above board.
"Patriot was highly successful following its launch more
than five years ago with significant assets, low debt and a
market value that more than quadrupled in less than a year," the
spokesman Vic Svec said in a statement earlier this week.
The bankruptcy is In Re Patriot Coal Corp, U.S. Bankruptcy
Court, Eastern District of Missouri, No. 12-51502.