A group of hedge funds that held junior debt in Peabody Energy Corp. have lost a bid to scoop up $54 million in preferred equity in the coal mining company months after it successfully reorganized in bankruptcy, WSJ Pro Bankruptcy reported. Judge Audrey G. Fleissig of the U.S. District Court for the Eastern District of Missouri on Friday dismissed an appeal brought by the hedge funds that challenged the terms of Peabody’s approved chapter 11 plan, which took effect in April. Judge Fleissig in rejecting the appeal cited a legal doctrine called “equitable mootness,” ruling that granting the hedge funds’ request would have unraveled complex transactions, which were fairly negotiated at the time and allowed Peabody to exit bankruptcy, months after they were consummated.
