Coal Company Bankruptcy

It is simply the circle of life; businesses are born, they grow, they have their ups and downs, and sometimes they fail. While personal bankruptcy is a tragedy for anyone, when a business goes belly-up it could negatively impact hundreds of employees. The only way to counteract this is for new businesses to come in and take the place of the old. In St. Louis, a coal company is experiencing heavy losses and may file for bankruptcy, and if it fails to restructure and pay off its debts, new energy companies will need to fill the gap.

According to an article in St. Louis Today, a major energy company, Armstrong Energy, is considering filing for chapter 11 bankruptcy. The company is primarily a coal supplier that runs five mines in Kentucky, and in 2016 the mines produced nearly six million tons of coal. Armstrong provides heat and electricity to huge portions of southern Illinois and Indiana, so a bankruptcy could be a huge blow to all of their customers. Armstrong reported a whopping $17.2 million loss in the second quarter, and this is on top of failing to make an $11.75 million interest payment in June. This follows a disturbing trend, as in 2016 two other coal companies filed for chapter 11, Arch Coal and Peabody, also headquartered in St. Louis. The reason that these companies are failing is because of increased competition from natural gas companies that are offering cleaner and cheaper energy alternatives. Chapter 11 bankruptcy allows these companies to “restructure” and get their finances in order without worrying about having to pay creditors back for a short period of time.

There are many options in the St. Louis area for those considering bankruptcy. For individuals and families, The Powderly Law Firm, L.L.C can assist with either chapter 7 or chapter 13 bankruptcy filings. For huge corporations, however, the chapter 11 process is a lot more difficult and requires multiple lawyers and sometimes even multiple firms. “Restructuring” may involve mass layoffs, and even after the debt is repaid the company may still fail if their financial model is not stable. The losses experienced by Armstrong are not new, and it may be time to reevaluate whether or not coal plants are a viable energy source moving forward. The losses in St. Louis and in Kentucky, where the mines are, will be devastating. In order to save these states, new industries will have to come in to take their place.

In the face of climate change, new energy sources are constantly being researched. Natural gas is pushing out coal due to being cleaner and better for the atmosphere, but the methods to extract this energy from the earth are very controversial. It is also not known how long we can sustain ourselves on natural gas, so I think that a push towards wind, solar, and hydroelectric power is the only way forward.

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