Armstrong Files for Bankruptcy

Illinois Basin coal producer Armstrong Energy Inc. filed petitions for reorganization under chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Eastern District of Missouri on November 1. The company took this action in order to transfer all of its assets to a new entity to be jointly owned by Knight Hawk Holdings LLC (Knight Hawk) and the company’s secured noteholders.

Armstrong expects its mining operations and customer shipments to continue throughout the chapter 11 process.

“We remain firmly committed to serving our customers and to being a good employer by maintaining safe, productive operations as we undertake this process,” said Armstrong Executive Chairman J. Hord Armstrong III. “We are confident that this court-supervised process is the best way to close the transaction expeditiously.”

Upon the close of the transaction, Knight Hawk will take control of Armstrong’s ongoing operations.

The company filed various motions with the Bankruptcy Court requesting authorization to continue paying employee wages and providing health care and other benefits. Armstrong has also asked for authority to continue existing customer programs and intends to pay suppliers in full under normal terms for goods and services provided after the filing date of November 1.

As of June 30, Armstrong controlled more than 445 million tons of proven and probable coal reserves in western Kentucky and currently operates five mines. Armstrong also owns and operates three coal processing plants and river dock coal handling and rail loadout facilities, which support its mining operations.

In August, Armstrong Energy Inc. mentioned it was facing possible bankruptcy because it continued to experience operating losses and the inability to repay an interest payment. The company’s net loss for the first six months of 2017 was $32.6 million, higher than a net loss of $28.4 million in the second quarter of 2016.