The Birmingham, Ala., company and its lenders said during the hearing that the restructuring support agreement negotiated with lenders before Walter Energy filed for bankruptcy was now void.It's hard reorganizing a coal miner.
The agreement had called for senior lenders to swap out $1.9 billion in debt for equity and contained certain provisions, including that Walter Energy would obtain court approval of a so-called cash-collateral motion that granted the lenders certain protections in exchange for permitting access to cash securing their debt.
Although Judge Tamara O. Mitchell of the U.S. Bankruptcy Court in Birmingham approved a cash-collateral motion, changes made by the judge were unacceptable to the lenders. As a result the restructuring support agreement has fallen apart, according to court documents. With coal prices continuing to plummet and the bankruptcy case itself in free fall, according to Walter Energy’s lawyers, the company went to court Thursday asking the court to approve a new cash-collateral motion, this one on terms that are acceptable to lenders, which grants the company access to cash for 30 days.