Bankruptcy papers filed by Murray Energy, the largest privately owned U.S. coal company, and its CEO Robert Murray, indicate the company is using bankruptcy as a tool to boost its profitability by ditching its employee pension and benefit obligations.
Pensions Shredded for Profits
These actions could seem surprising coming from a man who portrays himself as a champion of coal miners and the coal mining industry. Murray has lobbied hard and aggressively for environmental rollbacks that have been shepherded into reality by Energy Secretary Rick Perry – anti-environmental rules that greatly benefit the coal industry.
So why, three years into Trump’s coal-friendly administration, has Murray Energy declared bankruptcy? Even Trump himself promised to reinvigorate the withering demand for coal by rolling back environmentally friendly laws and standards.
According to In These Times, the Murray Energy bankruptcy papers, written by Murray’s nephew and newly named CEO, point to how other coal companies like Westmoreland and Blackjewel have “used bankruptcy to reduce debt and lower their cost structures by eliminating cash interest obligations and pension and benefit obligations.” By eliminating their workers’ hard-earned pensions and benefits, Murray Energy’s competitors were “better positioned to compete for volume and pricing in the current market,” In These Times reported.
According to CNN, Murray Energy pensions and benefits are worth about $8 billion. Allowing Murray Energy to escape them would likely topple the United Mine Workers of America’s pension plan. The plan provides pension benefits to about 87,000 retired miners and surviving spouses, who collect an average monthly pension of about $600.
So where does this leave Murray Energy coal miners and retirees? Unfortunately, without stronger laws barring these kinds of cost-cutting maneuvers, there is a real chance that they could lose the supplemental income and benefits that make the difference for thousands of families between financial comfort and struggle, getting by and poverty.
Sometimes corporations employ complex, creative strategies to eliminate worker pensions and benefits. In These Times notes the example of Peabody Coal, which created a shell company ironically named Patriot Coal, and then jettisoned about 10,000 of its retirees in this new spin-off company that was born to fail. Patriot Coal quickly declared bankruptcy, escaping its obligations and leaving retirees without their pensions and benefits, including medical coverage for former workers struggling with black lung. Yet the bankrupt company still managed to pay on its bank debts and hedge funds.
“The retirees are too old to go back to work,” Gary Campbell, a 37-year-old United Mine Workers of America (UMWA) member told In These Times. “So what happens when they can’t afford their house payment or car payment or medical bill? They’re being thrown to the curb. It’s horrible to see people treated like this.”
Some work is being done to protect coal workers from becoming the disposable commodities of big energy corporations. U.S. Senator Joe Manchin (D-WV) introduced the American Miners Act of 2019 earlier this year with the stated purpose of amending the Surface Mining Control and Reclamation Act of 1977 to transfer certain funds to the 1974 United Mine Workers of America Pension Plan. Provisions of the bill were incorporated into other bills that were enacted.
Other worker advocates are plotting the development of better paying jobs in innovative green energy industries to help transition miners away from the coal industry.
Pension Plan Lawyers
Lawyers in Beasley Allen’s Consumer Fraud & Commercial Litigation section handle claims of employees in a variety of industries whose retirement plans are in jeopardy due to corporate mergers, bankruptcy or similar circumstances. For more information on these types of claims, contact Dee Miles, the Fraud Section Head.
Ohio Valley Resource