Bankrupt coal producer Peabody Energy Corp. believes that its long-term debt should be included in its current liabilities, a position that favors unsecured creditors to the tune of $1 billion, Reuters reported on Friday. A fight over how to treat long-term debt in calculating the mining company's assets has been looming since Peabody filed for chapter 11 protection in April with $10 billion of debt. The issue will have a major impact on how much each group will recover from the bankruptcy. Peabody initiated a lawsuit against secured creditor Citibank and Wilmington Savings Fund Society, a trustee for other secured creditors, on Friday in U.S. Bankruptcy Court in St. Louis. The company asked the court to rule that long-term debt should be considered part of current liabilities. The company said that it had taken action because its agreement for debtor-in-possession financing ties its submission of a confirmable plan to emerge from chapter 11 to obtaining a resolution of the long-term debt issue no later than Oct. 10.
