Coking Coal: Metallurgical Coal Miner Sells Assets to Black Energy Corp

Coking Coal, LLC filed chapter 11 on December 16, 2024 in the U.S. Bankruptcy Court for the Eastern District of Kentucky (Pikeville Division). The debtor is a metallurgical coal producer that operates the Black Bear mining complex near Norton, Virginia, with underground operations in Kentucky and Virginia and two coal handling and preparation plants. Court filings describe a business built around exports to steel and coke producers and logistics that depend on Norfolk Southern rail service and the Port of Baltimore.

The chapter 11 case centered on debtor-in-possession financing from the prepetition lender, Tacora Capital, and a section 363 sale process. The court entered a Sale Order on July 16, 2025 approving a transfer of substantially all assets to Black Energy Corp. and a contingent recovery mechanism for general unsecured creditors. After the sale, the debtor moved to dismiss the case and proposed a post-dismissal structure to administer the contingent payments.

Debtor(s)	Coking Coal, LLC
Court	U.S. Bankruptcy Court, Eastern District of Kentucky (Pikeville Division)
Case Number	24-70529
Judge	Hon. Gregory R. Schaaf
Petition Date	December 16, 2024
Petition Type	Voluntary chapter 11
Case Posture	DIP-funded section 363 sale; post-sale dismissal motion pending
Sale Order Entered	July 16, 2025
Purchaser	Black Energy Corp.
Total Liabilities	Approximately $121 million
Prepetition Secured Debt	Approximately $41.84 million (Tacora Capital)
Unsecured Trade Debt	Approximately $21.34 million
Employees	Approximately 49 at filing
DIP Facility	Up to $4.5 million new money with a $41.84 million roll-up

Restructuring Path, DIP Financing, and Case Status

The case proceeded as a sale-focused chapter 11 process rather than a plan confirmation path. Court filings show that the debtor sought to stabilize liquidity with a DIP facility, pursue a court-supervised asset sale under section 363, and then dismiss the case after closing. That sequencing meant the primary economic recovery for most creditors depended on the sale process and the post-closing contingent payment structure.

DIP facility structure and economics. The debtor sought a two-part DIP package: up to $4.5 million of new money and a $41.837 million roll-up of the prepetition secured facility, for total availability of roughly $46.3 million. The Interim DIP Order capped interim-period draws at $1.5 million, and the Final DIP Order approved postpetition advances at a 13.5% interest rate. Loan documentation referenced a 17.5% contract rate with a 6% default rate premium, but the final order sets the operative rate for postpetition advances. The DIP budget also included a committee investigation budget that began at $25,000 and increased to $75,000 in the final order. The debtor later sought two amendments to extend runway and increase borrowing capacity: the first amendment would raise the cap to $6.019 million and extend the budget through May 30, 2025, and the second amendment would raise the cap to $8.9 million, extend budget coverage through August 22, 2025, and add a $250,000 carve-out for debtor's counsel and the claims agent.

The interim order also imposed a rolling 13-week budget with weekly variance reporting, giving the DIP lender approval rights over budget updates and material deviations. The final order preserved carve-outs for disputed collateral categories, including "Marco Coal," equipment subject to the Panorama lease, and certain collateral funds tied to letters of credit. Those carve-outs preserved third-party rights while still granting the DIP lender liens and superpriority claims over other estate assets.

Sale process design and deadlines. The sale process followed the standard features of a section 363 sale, including a stalking-horse bidder, an auction if competing qualified bids emerged, and a court hearing to approve the transaction. The Bidding Procedures Order required bidders to submit a 25% deposit, set $25,000 minimum overbid increments, and established a March 5, 2025 bid deadline with an April 4, 2025 auction date and an April 17, 2025 sale hearing. The procedures also included mining-specific conditions, including obligations to address permit transfers, assume reclamation responsibilities, pay regulatory fees, and replace reclamation or financial assurance bonds. Black Energy Corp. was identified as the stalking-horse bidder in the Sale Motion.

Sale order economics and transfer mechanics. The court approved the Sale Order on July 16, 2025. The purchase price structure included a $4.5 million credit bid applied against postpetition obligations, a $637,500 cash payment for disputed "Marco Coal" that was placed in escrow pending resolution of asserted rights, and the assumption of certain liabilities set out in the asset purchase agreement. The order granted free-and-clear protections under section 363 and recognized good-faith purchaser protections under section 363(m). The approved transaction transferred substantially all assets, including estate causes of action, while limiting the debtor's ability to pursue certain avoidance actions against non-insider general unsecured creditors.

The sale order also addressed cure costs for assumed contracts and enjoined post-closing efforts to assert transferred liens or claims against the purchaser or the acquired assets. These provisions are typical in section 363 transactions and are designed to provide the buyer with clean title, while preserving limited creditor rights through defined claim processes rather than post-closing litigation.

General unsecured creditor recovery mechanics. The sale order embedded a contingent payment mechanism with a maximum potential recovery of $1.55 million for general unsecured creditors. The structure included a $100,000 closing-date carve-out for committee counsel (with any unused amounts flowing to general unsecured creditors) plus two post-closing tranches tied to production, sales volume, and realized price thresholds over 36 months. The purchaser is not required to take actions to meet the thresholds, and the agreement calls for quarterly reporting and payment calculations.

The order ties the payments to monthly production and pricing thresholds but requires quarterly reporting and payment calculations, creating a lag between operational performance and distributions. The purchaser has no obligation to take actions to meet the thresholds, so recovery depends on the buyer's post-closing operating decisions and market conditions rather than on estate cash remaining at confirmation.

Post-sale dismissal and wind-down posture. After the sale closed, the debtor filed a Motion to Dismiss the chapter 11 case rather than convert to chapter 7, arguing that a trustee process would add cost and delay with limited incremental recoveries. The motion referenced bar dates of August 15, 2025 for general, governmental, and administrative claims and described wind-down tasks that included resolving fee applications, reconciling administrative claims, and addressing disputed collateral. The official committee of unsecured creditors also filed a motion seeking approval to create an ad hoc committee of creditors to administer the contingent GUC payment mechanism after dismissal.

Professional advisors and claims administration. The debtor retained Dinsmore & Shohl LLP as debtor and debtor-in-possession counsel and Hamilton Law Offices, PLLC as conflicts and special counsel. The debtor also sought authority to retain Epiq Corporate Restructuring, LLC as claims and noticing agent effective as of the petition date.

Claims administration featured in the post-sale wind-down plan. The dismissal motion referenced August 15, 2025 bar dates for general, governmental, and administrative claims, and the debtor sought to reconcile those claims before a dismissal order. The claims agent's role includes maintaining the claims register and distributing notices, which supports the bar date process and the post-dismissal tracking of any contingent payments under the sale order.

Business Overview and Asset Footprint

The First Day Declaration described Coking Coal, LLC as a producer of high-volatility bituminous metallurgical coal, marketed under the "Black Bear" brand. The core operating footprint was the roughly 49,300-acre Coking Coal Complex near Norton, Virginia, consisting of the Pardee and Pigeon Creek complexes. The company reported two coal handling and preparation plants with combined throughput capacity of about 2,150 tons per hour, and an April 2024 independent appraisal valued the plants and related equipment in the nine figures. Filings also cited total coal reserves of roughly 348 million tons, a reserve base the company characterized as sufficient for long-term production.

The preparation plants are central to the operating model because they handle coal processing and sizing before shipment. The appraisal value attributed to the plants and equipment underscores that a significant share of enterprise value was tied to processing infrastructure rather than only in-ground reserves. For an export-oriented producer, preparation capacity can also influence the ability to meet customer specifications and shipment schedules.

Customers and export positioning. The debtor identified customers that include ArcelorMittal S.A. and Zentralkokerei Saar GmbH and described export logistics that depend on Norfolk Southern rail service and the Port of Baltimore. That positioning reflects a business model oriented toward the steel sector, where metallurgical coal is converted into coke for blast furnace operations. The dependence on export infrastructure is also a central operational constraint, because disruptions in rail service or port capacity can add demurrage costs or delay shipment timing.

Workforce and operating scale. At the petition date, the debtor reported approximately 49 employees, down from a historical level of roughly 150. The company also noted that additional furloughs were under consideration postpetition, a detail that highlights the degree of operating contraction before the filing. The reduction in headcount tracked a broader shift in Central Appalachian coal employment during the same period.

Market Context for U.S. Metallurgical Coal

U.S. metallurgical coal production is a smaller share of total coal output but plays a disproportionate role in exports. The United States produced about 67 million short tons of metallurgical coal in 2023 and exported roughly 76% of that output. Metallurgical coal accounts for about 10% of U.S. coal output yet has historically sold at a 90% premium to thermal coal prices, reflecting the higher-quality requirements for steelmaking and the limited number of exportable reserves globally. Only four countries have substantial exportable metallurgical coal reserves: Australia, the United States, Russia, and Canada.

Metallurgical coal production tends to be higher cost than thermal coal because reserves are concentrated in Appalachia and often require underground mining in thinner seams. Export pricing has historically helped offset that cost differential, which helps explain why U.S. producers are closely tied to seaborne steel markets rather than domestic power demand. For a company like Coking Coal, the economics of production and shipping are tightly linked to export price benchmarks and the reliability of rail and port infrastructure.

The United States accounted for 14% of global metallurgical coal exports in 2024, second to Australia's 43% share. In the same period, metallurgical coal represented 53% of U.S. coal exports. The United States produced 90 MMst of steel in 2023 and ran at roughly 75% capacity utilization in 2024, a reminder that domestic met coal demand depends heavily on blast furnace utilization, which is a smaller share of total U.S. steel output.

CRS also noted that China produces over half of the global steel output of about 2,100 MMst and that blast furnace steel accounts for roughly 30% of U.S. raw steel production. Those figures illustrate the export exposure of U.S. metallurgical coal producers because blast furnace output in Asia and Europe drives a large share of seaborne met coal demand.

Price volatility in Central Appalachia has been sharp. The 2024 spot price of $77.67 per metric ton for Central Appalachian coal was down from the 2022 average of $157.57 per metric ton. Those shifts matter for a producer like Coking Coal that sells metallurgical coal but operates in a region where price swings can move cash flow materially within a single calendar year.

Quarterly production and export data also highlight the scale of the U.S. coal market. U.S. coal production in Q2 2025 totaled 128.1 million short tons, with the Western region producing 68.2 million short tons. Total U.S. exports were 22.4 million short tons in the quarter, including 11.6 million short tons of metallurgical coal exports. Those volumes underscore the export orientation of the met coal segment even as domestic power-sector consumption declines.

Export volumes have also been significant. U.S. coal exports averaged 9.0 million short tons per month in 2024, with June 2024 reaching 10 million short tons. The Q2 2025 export price averaged 107.52 per short ton, a data point that shows the export market's contribution to revenue even as domestic consumption trends lower.

Regional concentration remains important. MCPA member companies accounted for more than 34 million tons of metallurgical coal in 2022, with production concentrated in Kentucky, Pennsylvania, Virginia, and West Virginia. Kentucky has seen a sharp decline: state coal production fell 14% in 2024 and the number of mines dropped to 94 in 2024. Kentucky had fewer than 3,800 coal miners in Q2 2025, the lowest level on record. These regional indicators provide context for the operating environment in which Coking Coal entered chapter 11.

U.S. export statistics also draw a clear distinction between steam coal and metallurgical coal. Steam coal supports electricity generation, while metallurgical coal is a steelmaking input, and the two markets respond to different demand drivers. For Central Appalachian producers, the export channel is particularly important because met coal pricing and volumes can diverge from domestic power-sector demand. That distinction helps explain why the case narrative focused on export logistics and seaborne pricing benchmarks rather than on utility demand.

Distress Drivers Cited in Court Filings

Court filings outlined a multi-factor distress narrative that combined market pricing pressure, operational disruptions, and liquidity constraints.

Metallurgical coal pricing decline. The debtor cited a sharp decline in metallurgical coal pricing compared with 2022 levels. The 2024 Central Appalachian spot price of $77.67 per metric ton was less than half the 2022 average of $157.57, a gap that directly affected revenue per ton for producers in the region.

Operational issues and quality penalties. The First Day Declaration reported equipment and operational issues at the Pigeon Creek complex and noted customer penalties tied to production and quality shortfalls. For a producer that sells to steel and coke customers, consistency and coal quality are critical, and the filings indicate these issues increased costs while reducing realized pricing.

Logistics disruptions tied to export routes. The debtor reported that export-dependent operations faced logistics disruptions and demurrage costs following the Francis Scott Key Bridge collapse in Baltimore. Because the Port of Baltimore is part of the export chain for Central Appalachian metallurgical coal, the disruption added friction to shipments in a period when the company was already managing tight liquidity.

Weather-related impacts. The debtor cited weather damage connected to Hurricane Helene as another factor that impaired operations. In a business with underground mines and surface infrastructure, storm damage can reduce output, delay shipments, and add repair costs.

Workforce reductions and liquidity strain. The debtor reported a workforce of roughly 49 employees at filing, down from a historical level of about 150, and noted contemplated furloughs of approximately 19 additional employees. The headcount reductions reflect a material contraction in operating scale ahead of the filing.

Capital access and covenant pressure. The debtor reported unsuccessful attempts to raise additional capital in 2024 and described covenant pressure under its prepetition secured facility. Those constraints limited the debtor's options to bridge the period of lower pricing and operational disruptions without resorting to court supervision.

Legacy litigation. The first day declaration also noted litigation filed by the Blackjewel Liquidation Trust related to the debtor's prior acquisition of the Pardee Complex, with a claimed amount of roughly $2.07 million. That dispute added uncertainty to the debtor's financial position and potential estate liabilities.

Capital Structure and Claims Landscape

The debtor reported total liabilities of approximately $121 million at the petition date. The capital structure included a large secured facility, intercompany obligations, and a meaningful level of trade debt. The roll-up feature of the DIP facility reflected the secured lender's position as both the prepetition and postpetition financing source.

The roll-up feature of the DIP facility converted the prepetition secured debt into postpetition obligations, reinforcing the secured lender's position in the case. The court also approved an investigation budget for the unsecured creditors committee, which created a defined window for diligence on potential claims while preserving lender protections through budgets and milestones.

Beyond these headline figures, court filings referenced additional asserted or purported lienholders, including equipment lessors and vendors. Those asserted liens were relevant to disputed collateral carve-outs in the final DIP order and to the sale order's transfer mechanics. The final DIP order also carved out certain assets from DIP collateral treatment if specific agreements were enforceable, including disputes over "Marco Coal" and equipment leased from Panorama, along with certain cash collateral funds held in connection with letters of credit.

The claims landscape for general unsecured creditors is primarily shaped by the sale-order contingent recovery mechanism. The $1.55 million cap and the production and pricing thresholds create a recovery profile that depends on post-closing operational performance by the purchaser, rather than on a traditional plan distribution funded by remaining estate assets. That structure reflects a case in which the sale proceeds were largely absorbed by secured obligations, leaving contingent upside as the principal path for general unsecured recoveries.

Environmental and Reclamation Considerations

Coal bankruptcies have frequently raised questions about reclamation funding and post-mining environmental obligations. Bankruptcy can leave reclamation obligations underfunded and shift responsibilities to state agencies. At least 60 coal companies filed bankruptcy between 2012 and 2022, and mines that had been through multiple bankruptcies had a higher median number of environmental violations. The Blackjewel bankruptcy involved nearly 200 mining permits and approximately 8,000 acres of disturbed land, an example often cited in discussions about coal-sector reclamation risks.

Kentucky's Energy and Environment Cabinet is responsible for reclaiming abandoned sites but lacks sufficient funding, and bond forfeiture practices can leave restoration costs underfunded. Those policy concerns provide additional context for why bankruptcy sale procedures in the coal sector place emphasis on bonding, permitting, and post-closing reclamation obligations.

Those broader concerns were reflected in the case's bidding procedures. The court-approved Bidding Procedures Order required potential buyers to address mining permit transfers, assume reclamation obligations, pay regulatory fees, and replace reclamation and financial assurance bonds. By embedding these requirements in the sale process, the debtor and the court attempted to align asset transfer with regulatory compliance and post-closing reclamation responsibilities.

Key Case Timeline

The timeline reflects a compressed sale path. The sale motion was filed within two weeks of the petition date, bid procedures were approved in early February, and the sale hearing was scheduled for mid-April. Two DIP amendments in April and June extended liquidity as the sale process ran longer than the initial milestones anticipated. The sale order entered in July, followed by a dismissal motion at the end of the month, show a progression from filing to asset transfer in roughly seven months. The August bar dates and the committee's post-dismissal motion indicate that the remaining work focused on claims reconciliation and administering contingent payments rather than on confirming a plan.

Frequently Asked Questions

What does Coking Coal, LLC produce?

Coking Coal produces high-volatility bituminous metallurgical coal used in steelmaking. Metallurgical coal is processed into coke for blast furnaces, and U.S. producers shipped about 67 million short tons in 2023, with roughly 76% exported. The debtor markets its product under the "Black Bear" brand and sells to steel and coke producers.

When did Coking Coal file chapter 11?

The company filed chapter 11 on December 16, 2024 in the U.S. Bankruptcy Court for the Eastern District of Kentucky (Pikeville Division). The case is assigned to Hon. Gregory R. Schaaf.

Why did Coking Coal file for bankruptcy?

Court filings point to a combination of factors: a sharp decline in metallurgical coal pricing compared with the 2022 peak of $157.57 per metric ton, operational issues at the Pigeon Creek complex, export logistics disruptions tied to the Francis Scott Key Bridge collapse, customer penalties related to coal quality and production shortfalls, weather damage connected to Hurricane Helene, and unsuccessful efforts to raise additional capital in 2024.

How much debt did Coking Coal report at the petition date?

The debtor reported total liabilities of about $121 million, including approximately $41.84 million under the secured Tacora Capital facility, around $44.2 million of intercompany debt, and roughly $21.34 million of unsecured trade debt.

What DIP financing did the company obtain?

The DIP facility combined up to $4.5 million of new money with a $41.837 million roll-up of the prepetition secured facility, for total availability of approximately $46.3 million. The final DIP order approved postpetition advances at a 13.5% interest rate, and later amendments sought to raise the cap to $6.019 million and then to $8.9 million.

What happened to the company's assets?

The court approved a sale of substantially all assets to Black Energy Corp. on July 16, 2025. The consideration included a $4.5 million credit bid, a $637,500 cash payment for disputed "Marco Coal" held in escrow, and the assumption of certain liabilities under the asset purchase agreement.

What recovery is available for general unsecured creditors?

The sale order includes a contingent payment mechanism with a maximum potential recovery of $1.55 million. The structure includes a $100,000 closing-date carve-out and two post-closing tranches tied to production, sales, and pricing thresholds over 36 months, with quarterly reporting requirements.

Is the case still pending?

After the sale, the debtor moved to dismiss the chapter 11 case rather than convert to chapter 7. The dismissal motion cited the cost of a trustee process and laid out a wind-down plan that included bar dates and a post-dismissal structure to administer contingent payments for general unsecured creditors.

How does this case fit broader coal industry trends?

The filing occurred amid regional contraction in Central Appalachian coal. Kentucky production fell 14% in 2024, and the number of mines dropped to 94 statewide. Employment also declined to fewer than 3,800 miners in Q2 2025. Industry research has documented that at least 60 coal companies filed bankruptcy between 2012 and 2022.

Who is the claims agent for Coking Coal, LLC?

Epiq Corporate Restructuring, 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.

For more bankruptcy case analyses and restructuring insights, visit ElevenFlo's bankruptcy blog.