26 Sep

How Arch Coal Emerged from Chapter 11 Bankruptcy

WRITTEN BY Alexis Tate FEATURED IN Company Overviews

Reorganization plan

Chapter 11 is a type of bankruptcy that helps a business restructure its debts and obligations while enabling the business to stay afloat. Chapter 11 is generally filed by companies that require time to restructure their debts. This type of bankruptcy gives the debtor a fresh start, which is subject to the debtor’s fulfillment of the obligations under the reorganization plan.

Arch Coal (ARCH) used a reorganization plan, which was approved by the bankruptcy court in September 2016, to emerge from Chapter 11 bankruptcy. The plan helped the company eliminate $4.7 billion of debt from its balance sheet. As part of its restructuring plan, Arch Coal set aside collateral to cover future mine cleanup costs and ended its use of self-bonding. 

How Arch Coal Emerged from Chapter 11 Bankruptcy

The exit

On October 5, 2016, Arch Coal (ARCH) emerged from bankruptcy through successful financial restructuring. Through bankruptcy proceedings, Arch Coal was able to reduce its debt load 93% to $363.0 million, which consists of a new term loan and capital leases.

Under the reorganization plan, the company’s senior lenders received cash and the vast majority of Arch’s new stock. Unsecured creditors, including bondholders, would receive $30.0 million in cash and 6% of the new stock 

The company has third-party surety bonds in place covering 100% of its reclamation bonding requirements. Any outstanding debts owed by Arch Coal to suppliers that didn’t have collateral or security were wiped out.

Coal (KOL) peers Alpha Natural Resources (ANRZQ), Peabody Energy (BTU), and Walter Energy (WLTGQ), which had also opted for high-leverage inorganic growth, faced the same fate as Arch Coal—all three went bankrupt. We predicted these bankruptcies months before they happened, in the same order.

Latest articles

After being listed on the NASDAQ (QQQ) on March 29, Lyft (LYFT) stock has traded on a negative note so far.

23 Apr

Coca-Cola Stock Rises on Impressive Q1 Results

WRITTEN BY Sharon Bailey

Coca-Cola (KO) impressed investors with better-than-expected revenue and earnings for the first quarter.

23 Apr

Why Microsoft Bought Express Logic

WRITTEN BY Rachel Gunter

Microsoft (MSFT) announced this month that it had acquired a San Diego startup called Express Logic for an undisclosed amount.

Spirit Airlines is scheduled to report its first-quarter results on April 25. The airline has an impressive record of beating earnings estimates.

On April 23 before the market opened, legacy motorcycle maker Harley-Davidson (HOG) reported its first-quarter earnings results.

Williams Companies (WMB) is scheduled to release its first-quarter earnings on May 1 after the market closes.