Patriot Coal Corp. and its creditors' committee want to investigate Peabody Energy Corp.'s 2007 spinoff of the coal producer, saying that the transaction rid Peabody of $600 million in health-care and environmental liabilities, Bloomberg News reported yesterday. Patriot filed for bankruptcy in July, seeking to reorganize and shed some of the $1.6 billion it estimates is owed for lifetime health care for 8,100 retirees. Patriot has already sued to force its former parent to continue paying for the health-care costs of certain retirees whom Peabody employed before the spinoff. The proposed probe would allow Patriot to subpoena documents related to the spinoff, including those that Peabody has refused to share with the company and Patriot’s union, according to court papers. Patriot said that it is considering whether the 2007 transaction that created it "constituted an actual or constructive fraudulent transfer." Under bankruptcy law, companies can make recoveries for distribution to all creditors if money was found to have been improperly transferred out of the estate before the bankruptcy filing.
