Fred Palmer, former senior vice president of Peabody Energy, has joined the fight against the St. Louis-based coal company.
Weighed down by debt and squeezed by low shale gas prices and declining coal usage, Peabody filed for Chapter 11 bankruptcy in April 2016. Now, Palmer, who retired in 2014 after running Peabody’s government relations for 13 years, feels betrayed by the company’s management.
The stock Palmer accumulated during his years at Peabody would be worthless under a reorganization plan that the company submitted last month. He also benefits from a supplemental pension plan that Peabody wants to cancel, making him an unsecured creditor.
In a letter to the U.S. bankruptcy court, Palmer argues that Peabody should resolve its Chapter 11 case by simply reinstating all of its existing debt. Coal prices have improved so much in the past nine months that, according to his analysis, Peabody can earn more than enough to pay everything it owes.
Peabody maintains otherwise. Its plan calls for canceling $6.6 billion in debts as “a necessary step for the company’s financial health.”
A hearing is set for Thursday in the bankruptcy case. Judge Barry Schermer will consider a request to appoint an official equity committee, a step that many shareholders believe could save them from being wiped out.
Read more: St. Louis Post-Dispatch