Bankruptcy Judge Allows Patriot to Abandon Union Contracts
Citing union requirements and “without relief from debtors’ current retiree benefit costs, debtors will be forced into liquida-tion,” Surratt-States wrote of a case “plagued with uncertainty,” after a week’s worth of hearings.
The ruling was a major blow to the union, which represents about 40% of Patriot’s miners. UMWA President Cecil Roberts described the outcome as wrong and unfair. “Under American bankruptcy law, the short-term interests of the compa-ny are valued more than the dedication and sacrifice of the workers, who actually pro-duce the profits that make a company suc-cessful,” Roberts said. He said the union would appeal it in federal court.
Patriot Coal CEO Ben Hatfield, howev-er, hailed the decision. “This ruling repre-sents a major step forward, allowing our company to achieve savings critical to reor-ganization and preservation of more than 4,000 jobs,” he said in a statement. “The savings contemplated, together with other cost reductions across our company, will put Patriot on course to a viable business.”
Accordingly, Patriot may now cease con-tributions to a union pension plan on behalf of unionized workers, while reducing over-time pay, planned wage increases and vaca-tion time, among other concessions. In addi-tion, Patriot may terminate current retiree benefits while transferring them to a trust as of Q1 2014, financed by up to $300 million in future profit-sharing contributions.