According to Reuters, U.S. Bankruptcy Judge for Alabama’s Northern District Tamara Mitchell gave the greenlight this week. In her filed 57-page opinion, she said the producer’s situation would spin from bad to worse if the existing deals had to be maintained.

Walter, which filed for Chapter 11 for its U.S. assets earlier this year, had been trying to better position itself to sell off its operations.

“The court finds credible that no potential buyers have an interest in assuming such obligations, let alone assuming such obligations and investing such new capital,” Mitchell reportedly stated.

The collective bargaining agreement termination will allow a sale to proceed. Walter already had an offer on the table for an asset purchase by Coal Acquisition, a group comprised of its senior lenders. An auction on January 5 adjourned with no competitive bids received.

Should the sale close, Reuters said, Coal Acquisition would assume $115 million to $122 million in liabilities and also pay about $5.4 million for Walter’s assets. Additionally, it would forgive about $1.25 billion owed by the producer.

If the deal falls through, Mitchell reportedly said in the opinion, Walter will have no other choice but to begin shutting down its Alabama mines and sell them off one by one, thus reducing their value.

Walter, which also owns the partially idled JWR No. 4 and No. 7 mines in Alabama, reportedly told Mitchell that its cash on hand will be gone this month.

The United Mine Workers of America (UMWA) represented about 1,280 active and furloughed Walter Energy workers and another 2,700 retirees and dependents. It and fellow union United Steelworkers (USW) had objected to Walter’s proposal.

UMWA President Cecil Roberts called the decision “extremely disappointing, but not surprising” to the union.

“I want to be very clear: This decision does nothing to slow our effort to maintain a union contract at Walter Energy operations nor does it end our fight to maintain retiree health care benefits. If anything, it strengthens our resolve in this battle,” he said, adding that the union is hopeful the two can still reach a deal. “We will not be turned around. We will prevail.”

Walter’s Chapter 11 case is legally known as In re Walter Energy Inc., 15-02741, and does not include the company’s Canadian or U.K. assets.