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In re Lady H Coal Co., Inc.

United States Bankruptcy Court for the Southern District of West Virginia
193 B.R. 233 (1996)


Facts

Lady H Coal, Co., Inc. (Lady H) (debtor) was a coal-mining company that filed for reorganization under chapter 11 of the bankruptcy code. The majority of Lady H’s employees were unionized and covered by a collective bargaining agreement (CBA). Lady H hired a professional broker to sell its operations. Lady H failed to notify the union about the broker. During the sale process, Lady H and the broker made little effort to find a potential buyer who would assume the CBA. Lady H found a potential buyer in A.T. Massey Company, Inc. (Massey). Lady H and the broker failed to encourage Massey to bargain with the union or to promote the possibility of Massey assuming the CBA. Lady H entered into a letter of intent with Massey to complete the sale, and the terms did not require Massey to assume the CBA. Lady H the approached the union to modify the CBA. The union rejected Lady H’s proposal. Lady H filed a reorganization plan based on the sale to Massey and requested that the court approve the rejection of the CBA.

Rule of Law

Issue

Holding and Reasoning (Pearson, J.)

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