Opponents of Peabody Energy Corp's reorganization plan have filed an emergency appeal against a key piece of the coal producer's proposal they say violates U.S. bankruptcy law by prematurely requiring creditors to promise to support it, Reuters reported yesterday. At the heart of creditors' complaints are the terms of a $1.5 billion private recapitalization that Peabody has proposed as part of a plan to slash $5 billion of debt and exit chapter 11 protection. The plan by the world's largest private-sector coal company could provide lucrative returns for early subscribers. In order to sign up for the private offering, creditors had to support Peabody's broader reorganization plan, a complex and lengthy document, within days of its publication on Dec. 22 and almost a month before it went to bankruptcy court for approval. Bankruptcy Judge Barry Schermer approved the plan on Jan. 26, overruling objections from a range of parties and opening the door for Peabody to officially begin seeking creditor votes. In a filing with the U.S. Court of Appeals for the Eighth Circuit on Friday, an ad hoc committee of dissenting creditors said Peabody "improperly" forced the majority of creditors to commit their votes in favor of the plan well before it received court approval.
