Blackjewel L.L.C. Chapter 11: Coal Liquidation, Hot Goods Crisis, and Reclamation Trust

Blackjewel, L.L.C. and 13 affiliated debtors filed chapter 11 petitions on July 1, 2019 in the U.S. Bankruptcy Court for the Southern District of West Virginia (Charleston Division), under lead case number 3:19-bk-30289. The debtors entered chapter 11 freefall after Riverstone Credit Partners refused to extend a $34 million term loan maturity, triggering a filing that left approximately 1,700 miners across the Central Appalachian Basin and the Powder River Basin without honored paychecks. The case became a liquidating chapter 11 administered through the First Amended Joint Plan of Liquidation, confirmed on March 22, 2021, with an April 1, 2021 effective date.

The Blackjewel docket consolidated several distinct restructuring problems into a single case: a Department of Labor "hot goods" injunction that froze coal in transit on Kentucky rail cars, two failed DIP financing motions in the first 48 hours, a $5.47 million back-wage settlement funded out of joint-venture proceeds, two large 363 sales separated by geography, a WARN Act adversary class action, and a Reclamation Trust carved out to hold environmental obligations on dozens of surface mining permits. Five years after confirmation the Liquidation Trust remains active, with the term extended through April 1, 2027 to complete real property dispositions, claims reconciliation, and affirmative litigation against the Javelin/BJMS counterparties.

Debtor(s)	Blackjewel, L.L.C. (lead debtor; 13 jointly administered entities including Revelation Energy Holdings LLC, Cumberland River Coal LLC, Dominion Coal Corporation, Harold Keene Coal Co. LLC, Vansant Coal Corporation, Lone Mountain Processing LLC, and Powell Mountain Energy LLC)
Court	U.S. Bankruptcy Court, Southern District of West Virginia (Charleston Division)
Case Number	3:19-bk-30289
Petition Date	July 1, 2019
Plan Type	Chapter 11 Plan of Liquidation
Confirmation Date	March 22, 2021
Effective Date	April 1, 2021
Judge	Hon. Benjamin A. Kahn
Junior DIP Facility	Up to $2.9 million from Highbridge Capital Management and Whitebox Advisors (LIBOR + 12.50%, 4-month tenor)
Claims Agent	Prime Clerk LLC

Riverstone Default and Path to Filing

Blackjewel formed in July 2017 as part of a strategic restructuring that combined Eastern Appalachian coal operations in Virginia, Kentucky, and West Virginia with the Belle Ayr and Eagle Butte surface mines in Wyoming's Powder River Basin. The First Day Declaration of Jeff A. Hoops, Sr. describes 32 operating properties — including underground and surface mines, preparation plants, and loadouts — and more than 500 mining permits across the operating footprint. The Eastern Division employed roughly 1,100 workers; the Western Division employed roughly 600.

Multiple distinct events in the 24 months before filing eroded liquidity, as catalogued in the First Day Declaration. A 2017 roof collapse at the Lone Mountain complex disrupted production and generated unexpected costs. Changes to Kentucky workers' compensation laws raised operating expenses. Pricing contracts entered before metallurgical coal prices recovered locked the company into below-market sales. Significant flooding in 2019 disrupted rail shipments, and the termination of a contract with Noble Group eliminated a key revenue stream. In December 2017 the debtors had formed a joint venture, Blackjewel Mining Services (BJMS), with Javelin Global Commodities and Uniper to handle all coal marketing and sales, a structure that placed cash flow control with the BJMS counterparties and that became a contested source of liquidity strain in the months before the petition.

The proximate trigger was the company's $34 million term loan facility with Riverstone Credit Partners Direct, L.P. The facility, entered in 2017, included a $5 million non-interest-bearing "Hoops Tranche Loan." The debtors defaulted on the leverage ratio covenant for the period ending December 31, 2018. After months of negotiations seeking an extension, Riverstone notified the company on June 26, 2019 that it would not extend the July 17, 2019 maturity date. The debtors filed five days later. A bankruptcy court ruling later concluded that the prepetition lender tortiously interfered with the debtors' access to alternative DIP financing on the eve of filing — a holding addressed in detail in subsequent appellate opinions.

Capital Structure and the BJMS Joint Venture

The First Day Declaration sets out the prepetition capital stack. Riverstone held a first-priority lien on substantially all Blackjewel L.L.C. assets, subject to permitted prior liens, with $34 million outstanding and the company in covenant default since December 2018. Caterpillar Financial Services held an approximately $23.8 million first-priority lien on specifically identified heavy mining equipment. United Bank held an approximately $6.0 million first-priority lien on accounts, receivables, and inventory under a revolving facility plus a term loan. Fifth Third Bank held an approximately $7.3 million judgment supported by a purchase money security interest in Highwall Miner equipment. Javelin Global Commodities and Uniper S.E. each held smaller security interests in thermal coal — approximately $1.79 million and $4.95 million, respectively — tied to the BJMS marketing arrangement. Various equipment and capital leases rounded out the secured inventory.

On the unsecured side, aggregate trade debt approached $156.3 million, and Jeff A. Hoops, Sr. and the Hoops Prepetition Lenders held approximately $11.0 million in unsecured prepetition revolving loans. The $5 million Hoops Tranche Loan inside the Riverstone facility did not bear interest. Hoops and his affiliated entities subsequently filed approximately $24.5 million in additional claims against the estate, seeking recovery for loans, royalties, and business expenses while front-line workers and local governments remained unpaid.

The BJMS joint venture proved central to the case. By design BJMS controlled marketing receivables for Blackjewel's coal output, leaving the operating company structurally dependent on its joint-venture counterparties for cash flow. That dependency produced contested claims to receivables during the case and provided the funding mechanism — a $5.475 million BJMS settlement payment to the estate — used to satisfy the Eastern miners' unpaid prepetition wages. The Liquidation Trust later pursued affirmative litigation against Javelin Global Commodities and Black Mountain Marketing and Sales LP in the Eastern District of Kentucky, asserting tortious interference and conspiracy claims arising from the BJMS arrangement.

Failed First-Day DIP and Junior DIP Approval

The debtors arrived at filing without committed postpetition financing in place. The initial DIP motion (Docket 12) was filed on the petition date and produced only an interim order. A supplemental emergency DIP motion (Docket 36) filed the next day was denied at a July 2, 2019 hearing. On July 3 the court entered an interim order (Docket 57) approving a conditional postpetition financing arrangement, with a Conditional Final Order following on August 13, 2019.

As the case developed and the Western Division required separate stabilization, the debtors negotiated a junior DIP facility specifically for the Powder River operations. The motion was filed on July 19, 2019, with an interim order entered the same day; the Final Junior DIP Order was entered on August 26, 2019. Highbridge SCF Loan SPV, L.P. and Whitebox Multi-Strategy Partners Fund, L.P. — affiliates of Highbridge Capital Management and Whitebox Advisors — committed up to $2.9 million on a four-month tenor, with a two-month extension option carrying a 1.00% extension fee. Pricing was set at LIBOR plus 12.50% with a 2.00% LIBOR floor and a 2.00% default-rate spread. The junior DIP liens were subordinate to the existing Riverstone DIP liens and carried super-priority administrative claim status. Documentation milestones required execution of loan documents by August 2, 2019 and entry of the final order by August 16, 2019. Covenants obligated the debtors to maintain and stabilize the Western Division and incorporated the affirmative and negative covenants and events of default from the Riverstone DIP facility, with budget compliance required throughout.

The DIP record produced two notable secondary outcomes. A 2020 ruling later cited as In re Blackjewel denied a creditor's motion for adequate protection on the ground that the financing statement failed to perfect a security interest in a purchase and sale agreement. A separate 2021 district court ruling affirmed the bankruptcy court's application of the Section 552(b)(1) "equities of the case" exception to deny an undersecured lender's claim to postpetition asset sale proceeds.

Payroll Failure and the DOL Hot Goods Dispute

At filing, Blackjewel could not honor pay obligations to approximately 1,700 employees. Western Division miners had received cashier's checks that local Wyoming banks refused to cash. Eastern Division employees had received checks that were not honored when first-day DIP financing failed to materialize as expected. Judge Kahn held a series of telephonic status hearings on July 4–6, 2019 — over the holiday weekend — characterizing the matter as the highest priority in the case. United Bank cooperated to facilitate honoring the Western cashier's checks. Eastern employees who returned to mine sites to perform secure-and-shutdown duties received their prepetition wages under a court wage order; the remaining Eastern workforce could not receive prepetition pay until the case had financing to resume operations.

The Department of Labor escalated the wage failure into a Fair Labor Standards Act enforcement matter. Coal that had been produced by unpaid Eastern workers — sitting on rail cars at a transfer point in Harlan, Kentucky — constituted "hot goods" under the FLSA in DOL's view. The agency applied for temporary restraining orders in district courts in Kentucky, West Virginia, and Virginia to enjoin movement of the coal. The dispute was ultimately resolved through the sale transactions described below: Contura Energy's acquisition of the Pax assets required satisfying unpaid Eastern worker wage claims, and the BJMS joint venture funded the $5.475 million settlement payment to the estate that covered those obligations. After payroll checks were issued in the agreed amounts, DOL filed consent judgments in the respective district courts, releasing the coal and permitting BJMS to move it to market.

363 Sales to Contura and Eagle Specialty Materials

Blackjewel's restructuring proceeded through section 363 asset dispositions rather than an operating reorganization. The two material sales took place in the first four months of the case.

The first transaction involved the Pax Surface Mine in West Virginia. The debtors filed a sale motion on August 22, 2019 seeking to sell the open-pit mine and four mining permits to Contura Energy, Inc. Sale consideration totaled $1.1 million in cash plus application of a $5.05 million previously paid purchase deposit. Contura assumed the reclamation obligations and other defined assumed liabilities under the Pax asset purchase agreement. The Pax sale also resolved a portion of the DOL hot goods issue by satisfying unpaid Eastern worker wages tied to the coal in transit.

The second transaction was the Western Division sale. At a hearing on October 2, 2019, the court approved the sale of the Belle Ayr and Eagle Butte mines in Campbell County, Wyoming to Eagle Specialty Materials LLC for $16.2 million in cash plus the value of certain accounts receivable. ESM assumed reclamation obligations and unpaid employee-related obligations. Contura paid $90 million to ESM to facilitate the transfer, waived a $3.05 million purchase deposit, and waived certain claims against the debtors. In return, the court reaffirmed prior releases granted to Contura in the Pax sale order. The transaction also replaced approximately $238 million in surety bonds covering the Powder River reclamation exposure. ESM offered positions to all hourly employees in the Western operations.

Contested issues at the Western Division sale included objections from Komatsu Mining Corporation regarding two electric mining shovels and reservations of rights from United Bank concerning BJMS-related receivables proceeds. The Komatsu objection was resolved by agreement to address the secured claim through the section 365 assumption and cure process, with the buyer agreeing to pay any secured claim amount fixed by the court. Komatsu later obtained relief from the automatic stay in a 2020 ruling addressing repossession of the shovels at the ESM mines. The estate continued to dispose of de minimis assets, equipment, real property, and coal inventory through procedures established by court order.

WARN Act Class Settlement and Hoops Litigation

On July 25, 2019, three former miners — Shawn Abner, Jacob Helton, and Billy Hatton — filed a class action adversary complaint against Blackjewel, Revelation Energy, Lexington Coal Co., Jeff Hoops Sr., and Jeffery Hoops II. The complaint asserted WARN Act violations for the alleged failure to provide 60-day mass layoff notice, state wage payment violations under Kentucky, West Virginia, and Virginia law, and ERISA breach of fiduciary duty for unremitted 401(k) contributions. The settlement, preliminarily approved in February 2021 and incorporated into the confirmation record, allowed: $14,630,825.63 in priority WARN Act claims (representing 60% of 60 days' wages and benefits); $2,711,494.11 in priority wage claims; and a $125,000 cash payment from non-debtor defendants ($75,000 from the Hoops individuals and $50,000 from Lexington Coal Co.). Class counsel received one-third of distributions net of service payments plus approximately $75,000 in expenses, and six class representatives each received $5,000 service payments.

Litigation involving founder Jeff Hoops, Sr. continued in parallel and after confirmation. In late 2019 and early 2020 the debtors filed an adversary proceeding accusing Hoops of fraud and self-dealing, alleging that the founder had extracted millions of dollars from the company through improper transactions in the period preceding the filing. The estate's professionals alleged that Hoops accumulated losses through related-party transactions while the operating company moved toward insolvency. Separately, in January 2024, the U.S. Department of Labor reached a settlement requiring Revelation Energy LLC and affiliated entities to resolve more than $1.2 million in unpaid medical claims, and a federal court ordered the former Blackjewel 401(k) plan trustees to pay $637,014 in restitution for failing to remit employee contributions before the 2019 filing.

Liquidating Plan, Reclamation Trust, and Class Treatment

The First Amended Joint Chapter 11 Plan of Liquidation was filed October 21, 2020 and confirmed by order dated March 22, 2021, with an April 1, 2021 effective date. The plan established two trusts: a Liquidation Trust to wind down the residual estate, and a separate Reclamation Trust to hold environmental reclamation obligations attached to mining permits. The Disclosure Statement noted that available cash was unlikely to satisfy all administrative and priority claims in full.

Administrative Expense Claims, Priority Tax Claims, Fee Claims, and U.S. Trustee Fees were unclassified and addressed outside the voting classes. Class 1 accepted the plan across all voting debtor entities. Class 2 accepted at most entities; holders against Revelation Energy, LLC voted to reject. Class 3 accepted across all voting debtor entities. The court confirmed the plan under section 1129(b) cramdown as to the rejecting Class 2 entity, finding that the plan satisfied sections 1129(a)(10) and 1129(b). A notable plan feature was the "Avoidance Action Release" provided to holders of Allowed General Unsecured Claims: the debtors released their avoidance actions against such holders, with carve-outs for the Hoops Parties and United Bank. The United States and the Kentucky Energy and Environment Cabinet resolved their objections, and Administrative and Priority Tax Claim objectors either resolved or withdrew their objections.

A federal judge later authorized the abandonment of 33 coal mine permits in West Virginia and the potential transfer of an additional 171 permits, leaving state regulators and surety bond providers responsible for approximately $41 million in reclamation costs by some estimates. Congressional testimony in June 2021 used the case as a reference point for systemic gaps in surface mine bonding requirements.

Post-Confirmation Trust and DOL Reclassification

Five years after confirmation the Liquidation Trust remained operationally active. Aggregate professional fees approved across the case's life reached approximately $30.8 million, with $12.99 million paid through year-end 2025. The fee orders entered on June 28, 2021 covered the engagement period from July 2019 through March 31, 2021: Squire Patton Boggs (US) LLP received $11,230,018.50 in fees and $320,695.74 in expenses for lead co-counsel; Jefferies LLC received $5,329,000.00 in fees and $125,497.57 in expenses as investment banker; Whiteford, Taylor & Preston LLP received $1,241,546.00 as committee counsel; Berkeley Research Group, LLC received $283,280.00 as committee financial advisor; Prime Clerk LLC received $56,707.51 as administrative advisor; and Supple Law Office, PLLC received $129,130.00 as co-counsel. FTI Consulting, Inc. provided CRO services through David Beckman, with fees handled separately.

The Trust's largest post-confirmation claim dispute involved the Department of Labor. DOL had asserted approximately $14.05 million in administrative expense claims. After extended litigation and a discovery dispute resolved by court opinion in August 2025, the parties reached an Agreed Order on February 20, 2026 allowing $396,673 as an administrative expense claim and reclassifying $13.65 million as a general unsecured claim. The order preserves a 60-day window for DOL to seek reconsideration of the reclassification, triggered only after all other administrative and secured claims are paid in full. The Trust term was extended through April 1, 2027 to complete remaining work, including complex real property dispositions in Kentucky and Virginia, ongoing claims reconciliation, and the Trust's affirmative litigation against Javelin Global Commodities and Black Mountain Marketing in the Eastern District of Kentucky.

Subsequent litigation has tested the boundaries of the Trust's residual rights. A 2023 district court opinion affirmed a bankruptcy court ruling that Cardinal Reclamation Company, rather than Rhino Energy, holds the reclamation obligations for four disputed mining permits previously associated with Blackjewel. A 2024 Eastern District of Kentucky decision dismissed an adversary proceeding brought by Bluegrass Natural Resources against the Liquidation Trust on Barton Doctrine grounds, addressing competing ownership claims to property previously sold in separate bankruptcy proceedings.

Key Timeline

Frequently Asked Questions

Who is the claims agent for Blackjewel?

Prime Clerk LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What was the projected recovery for general unsecured creditors?

The Disclosure Statement projected a recovery range of 0% to 15% on estimated General Unsecured Claims of $292 million to $364 million. The Avoidance Action Release granted to Class 3 holders excluded the Hoops Parties and United Bank.

Who bought Blackjewel's Wyoming coal mines?

Eagle Specialty Materials LLC acquired the Belle Ayr and Eagle Butte mines in the Powder River Basin for $16.2 million in cash plus the value of certain accounts receivable, with the sale approved by the bankruptcy court on October 2, 2019. Contura Energy facilitated the transaction with a $90 million payment to ESM and the replacement of approximately $238 million in surety bonds.

What was the DOL hot goods dispute?

The Department of Labor invoked the Fair Labor Standards Act "hot goods" doctrine to enjoin movement of coal produced by unpaid Eastern miners that was sitting on rail cars at a transfer point in Harlan, Kentucky. The dispute was resolved through a $5.475 million settlement payment from the BJMS joint venture to the estate, which funded the Eastern miners' back-wage claims, after which DOL filed consent judgments releasing the coal.

What did the Liquidation Trust receive on the Department of Labor administrative claim?

A February 20, 2026 Agreed Order allowed $396,673 of the DOL's $14.05 million administrative expense claim and reclassified $13.65 million as a general unsecured claim, with DOL retaining a 60-day reconsideration window triggered only after all other administrative and secured claims are paid in full.

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