Arch Coal filed with the U.S. Bankruptcy Court a Chapter 11 Plan of Reorganization and related Disclosure Statement. Under the Disclosure Statement, holders of priority claim shall be entitled to payment in full; holders of allowed other secured claim shall be entitled to payment in full in cash; holders of allowed first lien credit facility secured claims shall be entitled to receive a ratable share of (i) total cash payment equal to $[114,796,527.78], (ii) $326.5 million in principal amount of new first lien debt and (iii) 100% of the new common stock; holders of allowed general unsecured claims (including first lien credit facility deficiency claims) shall be entitled to receive ratable shares of the value of the Debtors’ unencumbered assets; holders of Section 510(b) claims and interests in Arch Coal shall receive no distribution. The Plan constitutes a separate Chapter 11 Plan for each Debtor.
The Disclosure Statement notes, “With respect to substantive consolidation, the Debtors undertook a diligence process to ascertain whether substantive consolidation would be an appropriate remedy for some or all of the Debtors in these Chapter 11 Cases. While an argument asserting that the Debtors should be substantively consolidated has merit, substantial effort, time and expense would be required to fully prosecute substantive consolidation. With respect to a full deconsolidation of the Arch enterprise, there is also substantial effort, time and expense involved in ascribing an accurate value to recoveries that ranged from zero to low single digits, which was the range of recovery at a vast majority of the Debtors. Such low ranges of recovery are susceptible to wide variations based on even the slightest changes in assumptions. The Debtors propose to allocate distributions to holders of General Unsecured Claims as though the Debtors’ Estates have been substantively consolidated. In all other respects, the Plan treats the Debtors’ Estates on a non-consolidated basis.”
The Court scheduled a June 6, 2016 hearing to consider the Disclosure Statement. Read more coal bankruptcy news.
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