%1

A U.S. judge formally approved Peabody Energy Corp.’s plan to emerge from bankruptcy on Friday after the coal producer struck a settlement with the U.S. government over legacy environmental claims at a gold and metal mining subsidiary, Reuters reported yesterday. Under a last-minute deal with the U.S. Department of Justice, Peabody agreed to create a $43 million trust to manage environmental liabilities stemming from its dormant Gold Fields Mining subsidiary, according to court papers. St. Louis-based Peabody, the world's largest private-sector coal producer, owns mines in Australia and the United States and supplies the global market with the metallurgical coal used in steelmaking and the thermal coal used to generate electricity. Peabody expects to exit bankruptcy in early April with about $2 billion of debt amid dramatically improved short-term prospects for its business versus a year ago, when it sought chapter 11 protection with more than $8 billion of debt. In the environmental settlement, the Department of Justice was negotiating on behalf of the Environmental Protection Agency, the Interior Department, five states and seven Indian tribes. The parties filed claims worth billions of dollars, which Peabody disputed but said that it agreed to settle to avoid drawn-out litigation. Peabody agreed earlier in March to cover about $1 billion in future coal mine cleanup costs with third-party bonds.

A federal judge on Friday refused to throw out a challenge from an unhappy former lender to the chapter 11 plan that got Millennium Health LLC out of bankruptcy, the Wall Street Journal reported on Saturday. Voya Investment Management’s appeal of a ruling cutting off its right to sue over Millennium Health’s financial woes remains alive, in spite of a bankruptcy court confirmation decision, Judge Leonard Stark of the U.S. District Court for Delaware ruled. It’s not clear that the ruling will have any effect on Millennium, a drug-testing company which emerged from a clouded past and bankruptcy and remains in operation.

Peabody Energy Corp., the world's largest private sector coal producer, said yesterday that it expects to exit its chapter 11 protection in early April after a U.S. judge said he would approve its plan to slash over $5 billion of debt, Reuters reported. Bankruptcy Judge Barry Schermer said that he was ready to sign an order to approve Peabody's bankruptcy emergence once language regarding a late settlement of certain U.S. Department of Justice complaints had been finalized. The reorganization plan, which will repay secured lenders in full, received overwhelming support from its creditors. Peabody plans to re-list on the stock market, coinciding with increased demand from Asia and anticipation of eased regulation under U.S. President Donald Trump that has fueled investor enthusiasm for coal. Read more. 

The featured keynote at ABI's 2017 Annual Spring Meeting will be Spencer Abraham, former U.S. Senator and former U.S. Secretary of Energy. Additionally, a panel at the Annual Spring Meeting will be discussing legal and business developments in E&P cases. Click here to register! 

Former Dewey & LeBoeuf finance director Francis Canellas, a key witness in the long-running criminal case over the firm's collapse, told a New York jury yesterday that the now-defunct firm failed to tell lenders about its struggles to pay vendors and partners in the years before its 2012 bankruptcy, the New York Law Journal reported today. On the third day of direct questioning by Manhattan assistant district attorney Peirce Moser, Canellas returned to many of the same themes explored in his earlier testimony in a retrial against former Dewey CFO Joel Sanders and former executive director Stephen DiCarmine. Prosecutors accuse Sanders and DiCarmine of scheming to mislead the firm's lenders and investors about its finances. The retrial, which started in February, comes after the district attorney's initial case against Dewey's former executives ended in a mistrial in 2015. Canellas, a cooperating witness in the government's case, on Monday discussed Dewey's financial woes in 2009 and 2010, and the impact they had on the firm's finance department. He described a firm that had trouble paying its bills on time and was often unable to make payments that had been promised to partners or former partners at the firm. Canellas said that neither he nor anyone else at the firm told Dewey's lenders about those troubles, including during an early 2010 negotiation to refinance the firm's debt.

PricewaterhouseCoopers LLP yesterday said that it may seek a mistrial in a $3 billion malpractice case over the collapse of Jon Corzine's MF Global Holdings Ltd, saying it was blindsided when the plaintiff changed its theory of why the brokerage failed, Reuters reported yesterday. The auditor has been accused by MF Global's bankruptcy administrator of accounting negligence that let the former New Jersey governor invest $6.3 billion in European sovereign debt, leading to a liquidity crisis and an Oct. 31, 2011 bankruptcy. But PwC said the administrator has instead argued at a federal trial that began last Tuesday that Corzine's bet was sound, and that MF Global's collapse was caused by market "confusion" and a "crisis of confidence" that was "somehow" the result of PwC's accounting advice. PwC urged U.S. District Judge Victor Marrero in Manhattan to strike evidence and arguments supporting this theory, including from Corzine, or else declare a mistrial.