The filing was made recently in the United States Bankruptcy Court for the Western District of Virginia, Roanoke Division. Company officials said April 6, the same day as the company’s stock was delisted from the Toronto Stock Exchange (TSX), that it made the decision so that it can “continue serving customers without interruption.”
“Over the past several years, the coal markets in the U.S. have faced a number of significant challenges, including increased environmental regulations and reductions in demand due to weaknesses in the economy and lower natural gas prices,” Xinergy CEO Bernie Mason said. “Additionally, continued weakness in the market for metallurgical and thermal coal, combined with an extremely cold winter that impacted the mining and shipment of coal, has continued to erode Xinergy’s cash position.”
The Knoxville company, which has operations and properties in Central Appalachia, will use the Chapter 11 process to undertake a financial restructuring that it said will “create a strong financial foundation” for its future.
“After careful consideration of all available alternatives, Xinergy determined that a Chapter 11 filing was a necessary and prudent step and the best way to obtain the financing necessary to maintain regular operations and allow for a successful restructuring,” Mason said.
Xinergy will also seek approval to obtain debtor-in-possession financing to provide it with the needed funds to continue operations and fulfill daily obligations. Officials noted that the company will continue to pay its employees.
Mason said that the miner is optimistic about its plan.
“Xinergy will emerge…a stronger, more competitive company that is well positioned for success in the coal industry,” he said.
The company’s operations include Briar Creek and Raven Crest in West Virginia as well as the True Energy met surface mine in southwest Virginia. It also owns the South Fork complex in extreme southern West Virginia.