Peabody Energy Corporation’s Emergence from Chapter 11
4/10/2017

Throughout Peabody Energy Corporation’s chapter 11 proceedings, Davis Polk advised the administrative agent under Peabody’s prepetition first-lien credit agreement and as administrative agent for Peabody’s debtor-in-possession credit facility (which was repaid in full on December 15, 2016). On April 3, 2017, in accordance with Peabody’s confirmed chapter 11 plan of reorganization, Peabody emerged from bankruptcy.

Under the plan, which was ultimately supported by each of Peabody’s major creditor constituencies, Peabody received a cash infusion of approximately $3.5 billion in combined debt and equity, and the lenders under the first-lien credit agreement received repayment in full in cash of all principal outstanding thereunder, as well as postpetition interest at default rates and an additional interest rate claim settlement payment. The plan also incorporated a settlement of the “CNTA Dispute” - a contractual disagreement regarding the extent of the security interests granted in connection with the first-lien credit agreement, pursuant to which Peabody alleged that the first-lien lenders could be vastly undersecured. The bankruptcy court heard oral argument for summary judgment with respect to the CNTA Dispute in September 2016, and the CNTA Dispute was settled under the plan with the first-lien lenders treated as oversecured. Davis Polk worked closely with a steering committee of first-lien lenders to provide an exit facility backstop to the plan and settle plan-related disputes (including the CNTA Dispute), and to ensure that Peabody could expeditiously emerge from Chapter 11.

Peabody is the world’s largest private-sector coal company by volume, with 26 active coal mining operations located in the United States and Australia. As of December 31, 2015, Peabody and its subsidiaries’ property holdings included 6.3 billion tons of proven and probable coal reserves and approximately 500,000 acres of surface property through ownership and lease agreements. Peabody employed approximately 4,500 active full- and part-time employees and generated sales of approximately 180 million tons of coal in 2015. Peabody and its debtor subsidiaries filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 13, 2016 in U.S. Bankruptcy Court for the Eastern District of Missouri.

The Davis Polk insolvency and restructuring team included partners Damian S. Schaible and Darren S. Klein and associates Angela M. Libby and Jonah A. Peppiatt. The finance team included partner Kenneth J. Steinberg and associates Hilary Dengel and David S. Wheelock. The litigation team included partners Benjamin S. Kaminetzky and James I. McClammy and counsel Michael J. Russano. All members of the Davis Polk team are based in the New York office.