There was plenty in the complex deal to benefit bankers, lawyers, executives, and hedge fund managers. Patriot Coal Corporation was bankrupt, but its mines would be auctioned to pay off mounting debts while financial engineering would generate enough cash to cover the cost of the proceedings.
When the plan was filed in the U.S. bankruptcy court in Richmond last week, however, one group didn’t come out so well: 208 retired miners, wives, and widows in southern Indiana who have no direct connection to Patriot Coal. Millions of dollars earmarked for their healthcare as they age would effectively be diverted instead to legal fees and other bills from the bankruptcy.
As coal companies go bankrupt or shut down throughout Appalachia and parts of the Midwest, the immediate fallout includes lost jobs and devastated communities. But the Indiana case stands out as an example of how financial deals hatched far from coal country can also endanger the future safety net.
At issue is health insurance promised to people who worked for the Squaw Creek Coal Company in Warrick County, Ind., near Evansville, who, like other retired uni... Read more