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Patriot Coal Corp.'s bankruptcy may leave competing U.S. mining companies Peabody Energy Corp. and Arch Coal Inc. liable for expenses related to Patriot operations they once owned, Bloomberg News reported yesterday. Peabody, the largest U.S. coal producer ranked by sales, may be responsible for liabilities for the treatment of black lung disease that were assumed by Patriot when it was spun off from Peabody in 2007, according to a February filing. Peabody may be responsible for the liabilities, which are expected to be less than $150 million, should Patriot be unable to fund them, according to the filing. Arch, the fourth-biggest producer, may have to cover contracts from Patriot unit Magnum Coal Co., according to Arch filings.

Palm tree farmer Cocopah Nurseries Inc. filed for chapter 11 protection on Monday after an out-of-court restructuring, amid diminishing revenue, fell apart, Dow Jones Newswires reported yesterday. The company, which mainly grows and sells palm trees, but also grows citrus fruits and dates, has seen revenue fall to $23 million in 2010 from $57 million in 2006. To deal with the tight liquidity, Cocopah said, it began negotiations to restructure its debt with lenders, according to court filings. It owes $70 million on its line of credit from Rabobank and $65 million on a line of credit from Wells Fargo. It is in default on both.

Bankruptcy Judge James Peck ruled yesterday that a group of more than 20 hedge funds and money managers can't jump ahead of creditors of Lehman Brothers Holdings Inc.'s brokerage arm in the order to be repaid, the Wall Street Journal reported yesterday. Judge Peck said that Lehman's "soft-dollar" arrangements with the money managers don't entitle them to customer status over the brokerage unit's creditors. Soft dollars are credits a brokerage gives to hedge funds and other money managers for using its services, typically for securities research. Because soft-dollar credits cannot be used like cash to buy securities, Judge Peck said, they do not qualify for enhanced customer protection under the law.

American Airlines parent AMR Corp. plans to sound out potential partners about a merger or other investment deals in coming weeks, the Wall Street Journal reported today. AMR plans to send nondisclosure agreements to other airlines as soon as this month, kicking off a formal process in which the parties would exchange nonpublic information to consider possible deals. The airline also could invite private-equity firms and other investors to study the company's books.

Unsecured creditors of Allied Systems Holdings Inc. say that the car hauler's proposed bankruptcy loan from private equity owner Yucaipa Cos . would "shackle the hands" of the company, Dow Jones DBR Small Cap reported today. Yucaipa, a private equity firm controlled by financier Ron Burkle, owns 70 percent of Allied's equity, holds a majority of the company's $244 million in first-lien debt and is providing at least 75 percent of the proposed $20 million bankruptcy financing.

Bankrupt aircraft maker Hawker Beechcraft Inc. said that it was in exclusive talks with China's Superior Aviation Beijing Co over a sale of the company for $1.79 billion, Reuters reported yesterday. Superior, a maker of plane engines and parts, will also make payments to Hawker Beechcraft over the next six weeks to support its jet operations, under the terms of the exclusivity agreement. The sale does not include Hawker's defense business, which would remain a separate entity. A company controlled by the Beijing municipal government owns 40 percent of Superior.

Patriot Coal Corp. filed for chapter 11 protection along with nearly 100 affiliates filed for chapter 11 protection yesterday, Reuters reported. Patriot said that it had $3.57 billion of assets and $3.07 billion of debts, and has arranged for $802 million of financing to help it continue mining and shipments during the reorganization. "The coal industry is undergoing a major transformation and Patriot's existing capital structure prevents it from making the necessary adjustments to achieve long-term success," Patriot hairman and CEO Irl Engelhardt said. Patriot had also been hurt by its admission in May that a key customer might default on a sales contract, forcing the St. Louis-based company to seek a new loan package.

Ritz Camera & Image LLC is asking the court's permission to hold a September auction for the 137 camera stores that will be left in the chain after it holds store-closing sales at 82 locations, Dow Jones DBR Small Cap reported today. While the company did not name a lead bidder for its auction in court documents, it said that it will name one by Aug. 16. Read more.

Nine professional firms entered Manhattan bankruptcy court yesterday hoping to continue advising the Dewey & LeBoeuf estate in connection with the largest law firm bankruptcy in U.S. history, Am Law Daily reported. While none emerged unscathed, six of the nine firms—including lead bankruptcy counsel Togut, Segal & Segal—received the court's approval to forge ahead in their efforts on behalf of the defunct firm. Despite urgings from Dewey counsel that the former Dewey employees now at Proskauer would be shielded from involvement in the bankruptcy by an ethical wall, Bankruptcy Judge Martin Glenn denied the motion to hire Proskauer. He did, however, tell the lawyers they could submit a revised application detailing specific matters on which they propose Proskauer advise and additional case law showing that such representation would not be improper.

Bankruptcy Judge Kevin J. Carey on Friday put off a disclosure statement hearing scheduled for today in the Syms Corp. bankruptcy case and urged the parties to make good on the resolution that had seemed to emerge last week in the case, Dow Jones DBR Small Cap reported today. After months of fighting, the defunct discount retailer announced on June 29 that it had reached a global deal centered on a $25 million rights offering. Days later, the unsecured creditors insisted there were still kinks to work out and sought to put the brakes on the plan process, prompting another duel between the players.