In re Alpha Natural Resources, Inc.

Alpha Natural Resources and its subsidiaries (Alpha companies) (debtors) were major US coal producers. After the price of coal declined significantly due to decreasing demand, the Alpha companies filed voluntary petitions for relief under chapter 11. The price of coal continued to decline, and the Alpha companies suffered substantial postpetition losses. Despite the companies’ financial troubles, the companies’ unionized workers were protected by their collective-bargaining agreements. Among other things, the agreements required the Alpha companies to make payments to United Mine Workers of America (UMWA) funds for the benefit of retired union members. In February 2016, the Alpha companies asked the bankruptcy court to authorize a going-concern sale of the companies’ core assets under 11 U.S.C. § 363. The companies’ prepetition lenders served as the initial stalking horse bidder for the assets and agreed to bid $500 million. The lenders refused to close the sale unless they could receive the assets free of the Alpha companies’ obligations to pay retiree benefits under the Coal Industry Retiree Health Benefit Act and free of the companies’ obligations to the UMWA funds under the collective-bargaining agreements. Because the agreements contained successorship provisions that would otherwise bind the lenders to these obligations, the provisions needed to be waived by the union or rejected by the Alpha companies to make the sale to the lenders. After negotiations with the union were unsuccessful, the Alpha companies moved for an order authorizing them to reject the collective-bargaining agreements under 11 U.S.C. § 1113 and to modify retiree benefits under 11 U.S.C. § 1114. The union objected.