Davis Polk Helps Patriot Coal Gain Confirmation of Its Chapter 11 Plan of Reorganization and Emerge from Bankruptcy

Davis Polk has served as lead counsel to Patriot Coal Corporation and its subsidiaries throughout their approximately 18-month chapter 11 proceedings. On December 17, 2013, Patriot Coal’s Plan of Reorganization was confirmed by the U.S. Bankruptcy Court for the Eastern District of Missouri. On December 18, 2013, Patriot Coal emerged from bankruptcy, completing a successful restructuring.

Patriot Coal’s many accomplishments during its reorganization include obtaining an $802 million debtor-in-possession financing facility, a litigation victory and subsequent consensual restructuring of its legacy union labor liabilities, a settlement of non-union retiree benefits, a settlement with certain environmental groups, the successful prosecution of multiple adversary proceedings, and global settlements with Peabody Energy Corporation and Arch Coal, Inc. that provided the union retiree VEBA trust and Patriot with hundreds of millions of dollars in payments and financing.

In conjunction with its emergence from chapter 11, Patriot Coal has obtained (a) a $95 million senior secured asset-based revolving credit facility, (b) a $250 million senior secured term loan facility and (c) a $201 million senior secured letter of credit facility (which reflects a rollover of certain letter of credit obligations outstanding under the debtor-in-possession financing). These exit financing facilities were led by Barclays Bank PLC and Deutsche Bank Securities Inc. Patriot Coal also consummated two rights offerings, backstopped by Knighthead Capital Management, LLC and other unsecured creditors, to acquire (i) approximately $250 million of new 15% senior secured junior-lien PIK toggle notes and (ii) warrants to acquire new Class A common stock in reorganized Patriot Coal.

Patriot Coal is a leading producer and marketer of coal in the eastern United States, with 11 active mining complexes in Appalachia and the Illinois Basin. Patriot Coal ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls approximately 1.8 billion tons of proven and probable coal reserves.

The Davis Polk restructuring team includes partners Marshall S. Huebner and Brian M. Resnick, and associates Michelle M. McGreal and Kevin J. Coco. The litigation team includes partners Amelia T.R. Starr, Benjamin S. Kaminetzky and Elliot Moskowitz, and counsel Jonathan D. Martin and Michael J. Russano. The corporate and capital markets team includes partners Sarah E. Beshar and Mischa Travers. The finance team includes partner Jinsoo H. Kim and counsel John Perry. Partner Edmond T. FitzGerald and counsel Ron M. Aizen advised on compensation and employee benefits issues. Counsel Hayden S. Baker advised on environmental issues. Partner Kathleen L. Ferrell advised on tax issues. Members of the Davis Polk team are based in the New York and Menlo Park offices.