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Judge Approves $5M Loan To Ailing Blackjewel Coal, But CEO Hoops Is Out

Jeff Young

Kentucky’s Attorney General said on Friday he is investigating complaints from miners who say they are not receiving pay following the fast-moving bankruptcy negotiations for Blackjewel mining, which employs some 1100 people in Central Appalachia.

Attorney General Andy Beshear said in a statement he has received “numerous troubling complaints” related to the company, “ranging from clawed back paychecks to child support issues.

“I have therefore instructed my office to use all of its powers and resources to seek answers for those who have been harmed,” Beshear said.

Those complaints follow a federal bankruptcy court hearing in West Virginia in which a last minute loan was approved to help the company meet payroll. On Wednesday the court granted a request by West-Virginia based coal company Blackjewel LLC to borrow $5 million to stay afloat, on the condition the company’s president and CEO, Jeff Hoops, resigns.

The payment, which will be provided by Riverstone Credit Partners – Direct LP, could be used in part to pay employee salaries and benefits, according to an order signed Wednesday afternoon.

In exchange, neither Hoops, a longtime coal executive and Milton, West Virginia, resident, nor his family are authorized to conduct business on behalf of the company.

Blackjewel sought approval for the $5 million emergency loan after District Judge Frank Volk on Tuesday rejected a $20 million financing agreement proposed by the company.

The company said the approved $5 million credit line will allow management to conduct maintenance activities at abandoned mines, provide onsite security and ensure mining equipment isn’t damaged as Blackjewel seeks additional financing.

A weekly budget document shared with the court showed the company needs almost $2.7 million to pay employees and vendors.

Blackjewel and its affiliate Revelation Energy LLC control 24 active metallurgical coal mines and processing and prep facilities in Virginia, Kentucky, and West Virginia that employ about 1,100 workers.

The company also controls two large coal mines in Wyoming’s Powder River Basin region. On Tuesday, hundreds of workers at the Belle Ayr and Eagle Butte mines were sent home, an unusual move during a bankruptcy proceeding.

It’s less clear if layoffs are happening across the company’s Central Appalachian mines.

Frank Taylor, manager of the Virginia Employment Commission’s Richlands office, which represents Buchanan, Russell, and Tazewell counties, said he was not aware of any layoffs.

Blackjewel operates six active mines in those counties, according to data from the Mine Safety and Health Administration.

In Harlan County, Kentucky, Dan Mosely, county judge executive, said his office was hearing from Blackjewel workers whose paychecks were bouncing. Mosely said in the past he has received official notice under the Worker Adjustment and Retraining Notification Act of 1988, more commonly known as the WARN Act, when coal mines laid off workers.

In an all-staff email sent July 4, Hoops said that in the days leading up to Blackjewel filing for bankruptcy, the company struggled to secure additional financing. Hoops noted he had personally loaned the company $11 million, but was advised by financier Riverstone not to continue that practice.

He said he became aware that paychecks issued to the company’s hundreds of Wyoming employees were not clearing Friday afternoon and “immediately got United Bank on the phone to find out why.

“I realize we have over 1,800 hurting people out there right now and no one is hurting more than me over what has occurred in the past eight days,” Hoops wrote.  

Over the Fourth of July holiday, Judge Volk called a hearing with counsel to discuss the issue of employees not getting paid. In a Friday morning follow-up call with counsel, a representative said because of the holiday, they were unable to reach anyone at United Bank, but are working to get the issue resolved in Wyoming.

Travis McRoberts, an attorney with Squire Patton and Boggs, representing Blackjewel, told the judge they are working to ensure Blackjewel employees at its Appalachian mines that return to work “at our current reduced operating capacity” received any owed wages as quickly as possible.

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