Another wave of uncertainty has hit Buchanan County’s coal industry after employees at a local coal preparation plant and surface mining operation were laid off following the sale of their company’s assets in federal bankruptcy court.
Clintwood JOD LLC, a Southwest Virginia-based coal producer with operations in Buchanan County and Eastern Kentucky, has sold virtually all of its assets as part of Chapter 11 bankruptcy proceedings. The sale was approved last week by the U.S. Bankruptcy Court for the Eastern District of Kentucky.
Employees at the company’s Buchanan County operations were notified of additional layoffs Friday, just days after the court approved the sale. As of press time, the company had not announced how many local employees were affected.
The layoffs come several months after Clintwood JOD laid off approximately 300 workers in March, following an initial announcement of temporary furloughs, highlighting the continued challenges facing the Appalachian coal industry.
Under the court-approved sale, the company’s assets were purchased by CW Reclaim LLC of Cleveland, Ohio, for approximately $1.1 million, despite Clintwood JOD carrying tens of millions of dollars in debt.
Court records indicate the company owed creditors more than $60 million before the sale. Among its largest obligations were approximately $26.6 million owed to a New Jersey investment firm, nearly $9 million in equipment financing and millions more in unpaid coal severance taxes.
The bankruptcy marks a dramatic reversal for a company that acquired mining assets in 2019 to operate some of Central Appalachia’s remaining reserves of premium metallurgical coal, the type of coal used in steel production.
According to court filings, CW Reclaim LLC will assume responsibility for reclaiming and closing more than a dozen underground and surface mining operations in Kentucky and Virginia, as well as certain financial obligations incurred during the bankruptcy process.
In an affidavit filed with the bankruptcy court, Clintwood JOD CEO J. Chris Adkins said the accepted bid represented the best available option under difficult market conditions.
“While the CW Reclaim Bid is less than hoped for, the coal industry is suffering a downturn, and it is the best offer received after a thorough marketing and auction process and maximizes the recovery to the Debtors’ creditors,” Adkins said.
The sale comes as coal production continues to decline across the region. Industry analysts have pointed to several factors affecting the market, including lower-priced foreign competition, fluctuating demand for metallurgical coal, rising operating costs and the continued shift by many electric utilities toward other energy sources.
It remains unclear whether additional layoffs will occur or what plans CW Reclaim LLC has for the Buchanan County operations. Company officials had not released further information regarding future employment or production plans as of press time.
