In Re Patriot Coal Corp.

Patriot Coal Corporation (Patriot) (debtor) was a subsidiary of Peabody Energy Corporation (Peabody) that operated Peabody’s coal facilities east of the Mississippi. In 2007, Peabody spun off Patriot. Patriot had headquarters in St. Louis and 96 subsidiaries (debtors) in at least seven states, with three active mining complexes in Kentucky in the Illinois Basin near St. Louis and nine in West Virginia. When the coal industry declined, Patriot had substantial legacy costs from providing pensions and healthcare benefits and annual net losses approaching $200 million. A few weeks before filing bankruptcy, Patriot formed subsidiaries PCX Enterprises, Inc. (PCX), and Patriot Beaver Dam Holdings, LLC (PBD) (debtors) solely to establish venue in New York. Neither had New York operations, offices, or employees, but PCX opened a checking account in lower Manhattan holding its principal asset of about $100,000, and a New York attorney representing a debtor-in-possession (DIP) agent held PBD’s certificate evidencing 100% membership in a coal company. All 99 companies filed Chapter 11 petitions in the Southern District of New York, with PCX and PBD asserting venue based on domicile and principal assets and the other debtors asserting venue based on PCX and PBD’s affiliated cases. The United Mine Workers of America (UMWA) moved to transfer venue to West Virginia. Patriot’s former chief financial officer said the debtors chose New York to maximize value to stakeholders, as most of the top creditors and the proposed DIP agents and arrangers were there, while some sureties argued that Patriot chose New York partially to escape West Virginia courts in coal-mining country.