In the Coal Fields, a Novel Way to Get Rid of Pensions Is Born [View all]

[Coyotl]

http://truth-out.org/news/item/13691-in-the-coal-fields-a-novel-way-to-get-rid-of-pensions-is-born

Morgantown, West Virginia - If you are an individual struggling with debt, your options are limited. But if you are a coal company, you may be able to take advantage of a creative new strategy to shed your obligations.

Over the past decade, Peabody Energy and Arch Coal, the nation's largest coal companies, offloaded large amounts of retiree healthcare obligations to new companies that now face bankruptcy. The United Mine Workers of America (UMWA) says that the spin-offs were designed to fail in order to clean the companies' books of their retiree debts.

In 2007, Peabody Energy spun off a new company, Patriot Coal, which inherited 10 unionized mines in Kentucky and West Virginia. Along with the mines, Patriot took on $557 million in healthcare obligations to UMWA retirees. In 2008, Patriot bought Magnum, which had been similarly spun off from Arch Coal three years earlier. From Magnum, Patriot inherited another $500 million in obligations to retired miners, according to the UMWA.

Oddly, for a 5-year-old company, Patriot wound up with nearly three times as many retirees as active employees, more than 90 percent of whom never worked for the company. Overburdened by its debts, in July of 2012 Patriot declared bankruptcy.

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