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Walter Energy Global Settlement Procedures Sought

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Walter Energy filed with the U.S. Bankruptcy Court a joint motion for an order (a) authorizing procedures to implement a global settlement and (b) granting related relief.

The motion explains, “On December 22, 2015, the Court entered an order approving the Global Settlement (the ‘Global Settlement Order’). Pursuant to the Global Settlement, Met Coal will issue 1% of its equity (subject to dilution, as provided in the Global Settlement Order) (the ‘Equity’) to a newly formed trust (the ‘Equity Trust’) for the benefit of unsecured creditors. The Equity Trust will be formed and funded at the closing of the sale of the Debtors’ core assets to Met Coal (the ‘Closing’) which is expected to occur on March 31, 2016.”

The motion continues, “In addition to receipt of the Equity, certain beneficiaries of the Equity Trust will also have the right to participate in any exit financing, including any rights offering, on the same terms as the First Lien Creditors (as defined in the Global Settlement), which participation rights will be consistent with the Equity Trust’s pro forma closing ownership interest in Met Coal (i.e., 1% subject to dilution). By agreement of Met Coal, certain Equity Trust beneficiaries have until April 15, 2016 to participate in any exit financing. The Parties hereby request authority to calculate claim amounts for purposes of implementing the Global Settlement and to determine an unsecured creditor’s eligibility to participate in any exit financing. More specifically, by this Motion, the Parties request authority to (a) calculate the aggregate dollar amount of unsecured claims at $81.6 billion (the ‘Aggregate Claim Amount’) for purposes of making pro rata distributions of Equity and determining a creditor’s eligibility to participate in any exit financing, based on application of the procedural rules described below to filed and scheduled claims, and (b) for sake of administrative convenience, not make any distributions from the Equity Trust to claims below $2 million (the ‘Minimum Claim Amount’).”

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