Just four years ago, a proposal to mine coal in Westmoreland County promised hundreds of jobs, and the operator saw decades of mining in its future.
But now, in the throes of a depressed coal market and a legal dispute this year over allegedly missing royalty payments, Virginia-based C&D Coal Co. filed for Chapter 11 bankruptcy protection, according to court filings last week.
C&D Coal is seeking to restructure its finances after an agreement to mine certain properties for Kingston Coal Co. — a Wexford company that acquires and develops coal assets in Western Pennsylvania — went downhill.
In the filing, the company listed its assets and its liabilities each worth between $10 million and $50 million. The bankruptcy filing listed 20 creditors with a total of $1.2 million in unsecured claims.
A request for comment from Jimmy Cooper, listed as the owner of C&D Coal, was not returned.
Attempts to reach Dana A. Yealy, listed as president of Kingston Coal, and Ray Hoehler, listed as a lawyer representing Kingston Coal, were unsuccessful.
Court filings show the relationship between C&D Coal and Kingston Coal became strained this year after, Kingston claimed, C&D Coal failed to hold up its end of the bargain.
C&D Coal Co. had signed an agreement with Kingston Coal in 2008 to operate two mines in Derry Township, according to a lawsuit filed by Kingston Coal on Oct. 6 in Westmoreland County. C&D Coal signed another agreement in 2011 to operate another two mines in Fairfield Township.
The lawsuit alleged C&D Coal breached the contract after it began operations at only one of those four mines — the Kingston West bituminous coal mine in Derry Township.
C&D Coal held off on mining all the properties primarily because of market conditions, said David Fuchs, an attorney with the Robert O. Lampl Law Offices, a bankruptcy firm based Downtown that is representing C&D Coal. Mr. Fuchs also blamed the lawsuits, calling Kingston an “aggressive landlord.”
“The litigation was harmful to the company,” Mr. Fuchs said.
The coal market fell under intense pressure as power plants switched to cheaper and cleaner-burning natural gas. According to federal data, the quantity of coal burned annually at U.S. power plants has dropped by 29 percent since C&D Coal’s Derry Township agreement was finalized in 2008 — including a 21 percent drop since the Fairfield Township agreement was signed in 2011.
Consequently, coal tonnage mined in Pennsylvania has dropped since 2008 by 17 percent to 54 million tons in 2015, the data show.
Federal data lists Kingston West as an active underground mine but not currently producing. After producing nothing before 2013, Kingston West yielded 227,731 short tons of coal from 2013 to 2015, the data show, employing about 15 people as of 2015.
That coal was shipped to Conemaugh Fuels LLC, which runs the Conemaugh coal-fired power plant in Indiana County, according to the data.
Mr. Fuchs confirmed the Kingston West mine is not in operation. He suggested that there are other operators interested in taking over the lease but did not rule out a resolution that would allow the mines to resume operations under C&D Coal.
In May, Kingston Coal sent a letter to Mr. Cooper notifying him that C&D Coal had missed five consecutive months of royalty payments totaling $150,000 and that their agreements were subject to termination. Kingston Coal followed through with that threat in September and took back the leases, holding C&D Coal responsible for royalty payments through Aug. 31.
In a reply, C&D Coal denied any wrongdoing and said its agreement with Kingston was improperly terminated. C&D Coal has “fulfilled all obligations under the terms of the lease,” its response read. C&D Coal’s bankruptcy filing was noted on the court docket on Tuesday.
Derry Township supervisor Vince DeCario said he remembers C&D Coal coming into the area four to five years ago and promising hundreds of jobs. “This is news to me,” Mr. DeCario said of the bankruptcy.
“The expectations were high but nothing ever became of it,” he said. “(Mr. Cooper) talked about jobs and that, but it never came.”
C&D Coal’s restructuring will play out in the U.S. Bankruptcy Court for the Western District of Pennsylvania.
Daniel Moore: firstname.lastname@example.org, 412-263-2743 and Twitter @PGdanielmoore.