NEW YORK Jan 28 Patriot Coal Corp
wants to limit its obligation to pay retiree health benefits to
thousands of U.S. mine workers and their families as part of its
plan to survive Chapter 11 bankruptcy, according to court
documents filed Monday.
The company has proposed creating a trust, known as a
voluntary employees' beneficiary association, to provide a
maximum of $40 million annually up to a limit of $200 million.
The annual cost of providing retiree health benefits in 2012
was $71 million and is expected to rise to $73.8 million, nearly
twice as much as Patriot has proposed to spend, according to the
The company's proposal was detailed in an amended lawsuit
filed by eight mine workers and their union, the United Mine
Workers of America, against Peabody Energy Corp and Arch
They are seeking class-action status for more than 10,000
workers whose benefits were transferred from Peabody and Arch to
Patriot in a 2007 spinoff. The lawsuit claims Peabody and Arch,
rather than Patriot, should be responsible for paying the
retiree health benefits for the workers, some of whom retired
before 2007 and never worked for Patriot.
The union is concerned that Patriot will take advantage of
bankruptcy laws allowing companies to shed much of their retiree
health care and pension costs. It claims Peabody and Arch
deliberately shunted their obligations onto Patriot in an effort
to avoid having to pay the full amount.
Representatives for Peabody, Arch and Patriot could not be
reached outside of regular business hours for comment. A
spokesman for Peabody, Vic Svec, has previously said that
Patriot was "completely viable" when it was spun off and that
its collapse was not due to the cost of the retiree benefits.
The lawsuit is pending in federal court in West Virginia,
where Patriot has most of its operations. The bankruptcy case
began in New York before a judge ordered it moved to Missouri
where the company is based.
The lawsuit is Lowe et al v. Peabody Holding Co LLC et al,
U.S. District Court, Southern District of West Virginia, No.
12-06925. The bankruptcy case is In Re Patriot Coal Corp et al,
U.S. Bankruptcy Court, Eastern District of Missouri, No.