Many businesses experience periods of prosperity along with periods of economic hardship. Businesses throughout Pennsylvania are no exception to this changing condition. In fact, many energy related businesses have suffered in recent years. Currently, coal mining enterprises have experienced a downturn in business, and some are looking to Chapter 11 bankruptcy as an option.
Approximately four years ago, a Virginia coal mining company saw opportunity in Western Pennsylvania and began to operate coal mines in this area. At first, this endeavor was a lucrative investment for the company and provided hundreds of jobs in the community. However, as the coal mining industry began to experience economic problems, this endeavor also suffered. C&D Coal has now filed for Chapter 11 bankruptcy, specifying its creditors. The company has indicated that its unsecured debt is in excess of $1 million.
The benefit of filing Chapter 11 bankruptcy is that it is designed to allow the company to reorganize rather than liquidate. Creditors are prioritized according to the type of debt owed with taxes and employees receiving top priority. Some debts, leases or contracts may be renegotiated or even discharged. The ultimate goal is for the company to once again become profitable.
Like the rest of the U.S. economy, the economic environment throughout Pennsylvania is ever changing. A once lucrative company can experience months or years of economic problems and then find their financial position has radically changed. When this happens, the company may decide that reorganizing under Chapter 11 bankruptcy is in its best interest.
Source: powersource.post-gazette.com, "Virginia mining company says it is bankrupt", Daniel Moore, Dec. 28, 2016