LC Energy Holdings LLC, an assignee of Platinum Partners Credit Opportunities Master Fund LP, a New York-based hedge fund, ended up with Lily after bids submitted by Third Set Advisors, formed by Central Appalachian coal producer Quest Energy, and Redwine Management Company were not accepted during a court-sanctioned auction.

LC Energy is expected to pay less than $20 million for Lily and its 38.9 million tons of low-sulfur, low-chlorine coal.

In late February, Lily attorneys were working to finalize the sale agreement with LC Energy, and a final deal was anticipated by early March.

After the ink dries on the accord, LC Energy was expected to begin making plans to resume production at Landree, a Sullivan County continuous miner operation that has not produced coal since mid-September, shortly before Lily filed for Chapter 11 reorganization in U.S. Bankruptcy Court for the Southern District of Indiana.

IP&L, a subsidiary of AES Corp. of Arlington, Va., asked the judge for permission to terminate the coal sales contract early in the bankruptcy case. However, Judge Frank J. Otte on February 18 assigned the unexpired contract to LC Energy, albeit at reduced tonnage, after ruling the move was in the best interest of Lily’s estate, creditors and other parties.

Otte ordered Lily’s new owner to obtain a $1 million performance bond by March 1, and decreased the amount of coal to be delivered to IP&L under the remaining agreement to 160,000 tons before the end of this year. The judge said LC Energy/Platinum must begin sending coal to the utility, at the rate of 20,000 tons a month, starting May 1.

Under the original arrangement, Lily was to ship 200,000 tons from Landree to IP&L in 2012, and 400,000 tons in both 2013 and 2014. But that deal was revised several times, lowering the scheduled amounts. Landree produced only about 21,000 tons in 2013 before it was idled.