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Patriot showed a fondness for debt, however. In 2008, it bought Magnum Coal Co., a similarly debt-hobbled firm. Arch Coal set up Magnum in 2005 by giving it 12.3 percent of Arch assets and 96.7 percent of Arch's retiree health care liabilities.
Five years after its creation, Patriot employs about 4,200 and bears inherited responsibility for five times that many retirees.
It's no wonder then, that by 2010, saddled with debt loaded on it by both Peabody and Arch, Patriot began losing money. It filed for bankruptcy in 2012.
The bankruptcy judge explained it this way: "There are several events that catalyzed Debtors' (Patriot's) bankruptcy filing. Above all other reasons however are the liabilities that Debtors (Patriot) inherited from Peabody and Arch."
Patriot's obligations to retirees and their family members exceeded $1.6 billion. But more than 90 percent of the miners owed these benefits never worked a day for Patriot. They were employed by Peabody, Arch and their subsidiaries.
The bankruptcy judge approved a plan under which Patriot would replace that obligation with a $300 million fund -- a fund worth less than 19 percent of what was promised the retirees. Also, Patriot would place in the fund royalty payments that the bankrupt company contends could be worth "tens of millions" of dollars. Finally, the UMWA would receive 35 percent ownership of the bankrupt company -- an "asset" the court contended could be sold to help finance the retiree health care fund.
None of this gets close to covering $1.6 billion in obligations. Thousands of miners and retirees have protested Patriot's efforts to escape its commitments, marching in the streets of St. Louis and Charleston, W.Va. And the UMWA, which represents about 60 percent of Patriot's hourly workforce, has said it will appeal.
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